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An Advance Health Care Directive is a frequently-overlooked part of the estate planning process. In some states, an Advance Health Care Directive (also sometimes called a “Living Will”) is combined with a Health Care Power of Attorney document. The directive expresses the client’s wishes regarding end-of-life decisions. Unfortunately, it is a reality that all of us will die. We can each choose whether we wish to extend our lives by every means possible, or have a shorter life that may have more dignity. It is best to consider and state wishes on these decisions before the decisions are relevant.

If a person is in a terminal condition, in addition to their Advance Health Care Directive, the person will want to speak with their physician about “no code” orders. In some states, a Physician’s Order on Life-Sustaining Treatment, or “POLST,” might be appropriate.  We do not have such a document in Illinois.

One of my roles is to help my clients plan for their incapacity and their death, including end-of-life decisions. I can help clients prepare for the potentially distressful things that may come their way and thereby reduce the negative impact, both financially and emotionally.

Many published articles demonstrate how proper planning may alleviate a great deal of suffering, not only for my client(s), but of those closest to them, as well. It reminds us that planning to whom and how assets are passed is only a minor part of estate planning, just as money is only a small part of life. The most important things in life aren’t things. The most important things in life are the cherished memories and special moments that the family will treasure throughout their lives. An Advance Health Care Directive allows a person to decide how they will spend their final days. They may choose to spend it battling for extra time on the clock of life. They may choose to spend it at home with friends and family. Stress is reduced for everyone if that decision is made and communicated before it becomes relevant.

Bob

Whether or not we plan to do so, each of us will face death eventually. However, by planning we can make our passing easier and better in many ways for those we leave behind. The first article in the series demonstrated how you could gain privacy from the public by planning and using a trust rather than going through the public probate process. The second article in the series focused on how you can make the transition better through the manner in which you leave your assets to your loved ones. This third article in the series focuses on the importance of communicating your plans to your family to avoid problems after your death.

Death is seldom easy for those left behind. But, it’s even more problematic when inheritances don’t go as expected. Here’s a common situation. A parent, Mary, has three children, Bob, John, and Victoria. Bob and John have lucrative careers, while Victoria is an elementary school teacher. Mary decides to leave all her assets to Victoria because Victoria has greater need. Mary dies without disclosing her plans to her children. When Bob and John discover they’ve been disinherited, they feel hurt. They thought they had good relationships with their mother. So, they begin to look for reasons for this turn of events. Typically, suspicion falls on the child receiving the inheritance. Bob and John think Victoria must have used undue influence or coerced their mother to leave all her assets to Victoria. So, Bob and John accuse Victoria of exerting undue influence and contest Mary’s plan, tearing the family apart in the process. By the time the controversy is finished, Bob, John, and Victoria have frayed relationships and have spent most of their inheritance fighting each other. All of this could have been avoided if Mary had simply disclosed her plans to her children. If Mary had done that, Bob and John would have known Mary still cared greatly for each of them, but simply felt Victoria had greater need. Bob and John would have had an opportunity to ask Mary any questions they had. But, without a disclosure, Bob and John were left thinking the worst.

If you really care about your family and want to help preserve family harmony, communicate your plans to your family. This is especially important if there are any surprises in your plans. Surprises could be: your estate will be divided in unequal shares, your estate is larger than expected, your estate is smaller than expected, shares are being left in trust, etc. Sharing your plans is the loving thing to do, especially if you are planning a disposition that might be unexpected. The next article in the series will examine how to leave an unequal distribution with a lower risk of triggering a challenge to your plan.

Some days are better than others. This day started like every other day, arrive at the office, grab a quick up of coffee and hit the ground running. As the morning was getting up to full steam, one of my employees came to my office and asked if she could share with me a call she had just taken for one of our clients. The following is an account of a call she took that day. 

The phone rang first thing this morning. As my employee answered the phone and started to gather some information to help the caller. As she began asking basic information, she very quickly knew the person on the other end of the line had a story he wanted to tell. He introduced himself and said that his father passed away. When the family arrived at the house today to start making plans they found a portfolio with the words “Estate Planning” on the front. Inside they found a life insurance policy, letterhead with the attorney who prepared the documents with his number, all the detailed information they needed, and what they called “the gift.” Not wanting to be rude, our employee didn’t ask about the gift, but somehow she knew he was going to tell her. 

He began by saying his father was a private man, especially since his wife passed away. He still came to family events but always seemed to feel uncomfortable and like part of him was missing. As he got older and still living alone, they never talked about what would happen if he got sick or passed away. There just never seemed to be the right time to talk about those sorts of things, especially since it brought back such painful memories of losing his wife and their mother. 

There are three siblings and for the most part they are scattered around the United States. He lived the closest and was the oldest child, so he was the one that received the call that their father had been taken to the hospital and had suffered a heart attack. He contacted his brother and sister and all began planning their trip home. As they began to arrive one by one they made their way to the hospital. He didn’t last through the night. 

The next day they gathered at the house to begin to try and sort things out. They really had nowhere to start. They said over and over to each other, why didn’t we talk about this? And remembered when their mother had died, their father was the one that made all of the arrangements. They wondered if that was his way of protecting them. But, nevertheless, there were plans that had to be made.

His sister began by digging through filing cabinets, searching his bedside table drawer, and looking on the bookshelf where they kept the family Bible and family photo albums. That is where they found the Legacy Safeguard portfolio. It was almost like their dad put it there knowing that it would be one of the first places they would look. Not really even knowing what this was, his sister sat down and opened it up. The two other brothers were in various locations in the house all doing the same thing, looking for anything that might assist them with this daunting task. All they heard was, “Oh my gosh! I think I found something.” They all gathered around as their sister started to read what she found. First, they found a letter. Their Dad had written a letter with all their names listed at the top. It started with how much he loved them and then apologized for the last few years. He went on to say that he knew they had been worried about him but he was just so sad. He had tried to make the best of it, but never really got the hang of being without their mother. He talked about their lives together, how much he remembered each of them as children, and what joy they had given them as parents. He talked about their lives after they were grown and left home and how much fun he and his wife had rediscovering things they enjoyed like traveling. He detailed how he had filled out the portfolio they were looking at with all the information we would need to locate everything and then plan for his memorial services, and how he had a life insurance policy that would take care of all the final expenses. He really didn’t want much, just to be laid to rest next to their mother. He closed the letter with what he called “the gift.” For each of them, he made a special box. The caller said this was so much like their Dad because he used to smoke those fancy cigars that came in those wooden boxes. He always saved them for some reason. Now they knew why he saved at least three of the boxes. He said we would find them under his bed. 

Just as if they were kids again, they ran to the bedroom to find the boxes. As they pulled them out each box had our names on the top. Inside their dad had gathered up things that reminded him of each of them or things that were his that we wanted each of them to have. For the son that called in, it was his father’s pocket watch, a ticket stub from their first pro football game they went to together, a picture of the two them when he caught his first fish, his dad’s pocket knife, a Father’s Day card he had sent to him when he was in college when he needed money, and a note thanking him for being his first born son.

They sat that evening and poured through all the memories and made plans to call the number on the Legacy Safeguard gold card the next morning. When the Advisor answered the phone along with this heartfelt story, what the son wanted to convey was thank you. Thank you for giving us this gift of our father and his Legacy. Without this we would have been lost. 

Every day Legacy Safeguard works with families at the most difficult time of their lives. Some are more prepared than others. The person on the other end of the line, no matter what level of preparedness, needs a comforting voice and the ability to take the burden of planning out of their hands, at least for a little while. The gift we want to pass along to our members is the gift of leaving a lasting legacy. This was a good day, and we hope this story helps you leave “the gift” for your family! 

“Don’t have a funeral for me when I’m gone.” People say this, not realizing while the memorial service is about them, it’s not really for them. Funerals are for those still living who grieve the loss of someone they love.

Funeral and memorial service rituals help recognize this transition, socially acknowledge the death, and help start processing grief to move toward healing.

Dr. William G. Hoy, a grief counselor and death educator, explained, “Very often — with those who don’t stop and ritualize the death — six months later, these families are in my office, having a harder time with grieving and healing.”

Dr. Hoy and other counselors believe every good funeral includes these four R’s: Recognize Reality, Remember, Reaffirm, and Release. Use these as a guide towards a “good goodbye.”

Recognize Reality
The bereavement process starts with the recognition and realization that someone has died. To come to terms with the reality of death, someone has to stand up and say, “Yes, so-and-so has died,” or if you prefer, “passed on.” The reading of an obituary written and published about the deceased often serves this role at a funeral.

Remember
Funerals or memorial services provide an opportunity to rememberand share stories about the person. Eulogies by clergy, family members, and/or friends provide insights into the person’s character and family history. Remembrances can also be sparked by tabletop displays of items related to the person.

Reaffirm
An important part of funerals is to reaffirm beliefs, whatever they may be. If you believe your loved one has gone to a better place, say so. If you believe you will be reunited with him or her when you leave this world, say so. If you believe love is a valuable thing, just say so.

Release
Releasing the spirit of the deceased gives the living permission to move on, prompting healing tears and goodbyes. A simple release statement can be, “We now commit the body of (name) to the earth (or sea, fire, or wind) and let his/her spirit go free.”

Psychologists cite a number of reasons for holding funeral rituals. They make the dead “safely dead,” dispatched with proper ceremony to rest in peace. They confirm the deceased and their survivors matter, and that the community will continue. They provide structure in the midst of chaos and disorder, and ensure communal support for survivors during a stressful time.

I’d like to add a fifth R: No Regrets.

Let’s live our lives to the fullest every day. See and hear the beauty in nature. Take time to thank a loved one and tell them how much they mean to you. Share a hug. Enjoy good food and drink. And, of course, stop to smell the roses and admire all flowers.

Live life so that when it’s time to say goodbye, you can die with no regrets. And let your loved ones know it’s okay to have a funeral – they’ll bless you for it.

Call me with any questions,

Bob

Successor trustees are critical to managing the assets during periods of the client’s incapacity and at the client’s death. These successor trustees will make decisions regarding how the assets should be invested and whether they should be distributed and to whom. Successor trustees also make decisions regarding trust administration. As we all know, a trustee who is “difficult” can make everyone’s life miserable, including the estate planning attorney who is hired for the trust administration. 

Clients often default to naming a family member to serve in that role. Sometimes that may be the best choice. However, that may not always be the best choice. Often, clients do not have family members with the ability to serve in that role. In some cases, it may be unfair to ask a family member to serve in that role. For example, a family member serving as trustee may have a hard time refusing to distribute assets to other members of the family who are beneficiaries even if refusing a distribution is the right thing to do. An institutional trustee does not have to sit across from the brooding beneficiary at the Thanksgiving dinner table! 

Sometimes, an independent third party is the right choice for successor trustee. Many years ago, the trust departments of banks were seen as the only choice. Now, there is a trend away from bank trust departments and towards independent trust firms, according to research by Tiburon Strategic Advisors in San Francisco. Banks control 40% of the market of personal trusts. However, independent trust companies and brokerage trust operations now dominate the market for revocable trusts, which represent approximately $4.5 trillion out of $6.8 trillion in personal trust assets.  

Your client needs to be sure to name someone who is up to the task of filling his or her shoes as a successor trustee. Does the potential successor trustee have the financial experience to manage the assets in the client’s absence – or the prudence to hire a financial advisor who does? Do they have the fortitude to make difficult decisions regarding distributions to other beneficiaries? 

Even if your client has an individual who is up to the task, they may want to consider naming an institutional trustee at the end of the line. Whether your client chooses a bank trust department, an independent trust firm, or a brokerage trust operation, an institutional trustee can provide a backstop for the trust. Your client will know that, if the savvy individuals they hoped would serve are unavailable, the trust will still be managed professionally to meet the client’s goals long after the client is gone. 

The U.S. Department of Health and Human Services has begun enforcing HIPAA by imposing large financial penalties against healthcare providers for HIPAA violations. (In the first case, a healthcare provider received a $4.3 million civil penalty for failing to provide timely personal health information to patients upon their request; in the other, a different provider agreed to a $1 million settlement for disclosing patients’ personal health information without their approval).

If healthcare entities intensify their efforts to avoid HIPAA financial penalties, we may see a few things happen:

• Patients themselves may have an easier time gaining access to their own medical information. And some may even get it more quickly. At the same time;
• Patients’ family members — and others whom the patient wants to have access — may have a harder time getting the patients’ information.

What does this mean for your legal needs?

1. Everyone need a Health Care Power of Attorney (HCPOA) more than ever. This document may increasingly do double-duty. In addition to its primary function, the HCPOA also serves as a de facto HIPAA Release. The HIPAA law expressly authorizes the health care agent to receive the patient’s personal health information (called “PHI” under HIPAA).
2. You may increasingly need a separate HIPAA Release designating individual(s) — in addition to the health care agent — who can receive their medical information. Why? Peopleoften rely on someone other than their health care agent to help them navigate the healthcare system. This might be another family member, a friend, or a neighbor. Healthcare providers may be increasingly apt to request written authorization from the patient to deal with any of these folks on your  behalf.
   
   Alternatively, I address this need within the HCPOA document itself, rather than drafting a separate HIPAA Release. I have created a section in the HCPOA naming additional individuals to receive PHI under HIPAA, but who are not authorized as health care agents.

The stricter HIPAA enforcement may also create heightened challenges particular to college students and other young adults.  More to follow.

A Family Trust is a contract between husband and wife (Grantors) that gives instructions to financial institutions and county(s) in which they own real estate as to what to do with the assets if the Grantors are incapacitated for a short/long period of time or are deceased.  A Family Trust prepared by the Law Offices of Robert J. Mondo provides the following:

Advantages:

1. The Spouses are the Grantors, Co-Trustees and Primary Beneficiaries.
2. If funded properly, the Trust assets avoid probate.
3. All property, including personal assets are titled in the Trust.
4. Provides for Specific Gift giving that allows for changes without amendments.
5. Provides instructions for the Grantor’s well being if ever handicapped.
6. No decision as to which Trust to title an asset in. There is only one (1) Trust.
7. Provides estate exemption portability (in 2018 the Federal estate exemption is $22.2M).
8. No setting of basis until the surviving Grantor passes.
9. Allows for control over gifts to minors.
10.  Asset protection with Spendthrift provisions for Secondary Beneficiaries.
11. Access to assets for both Spouses with no limits.
12. The Secondary Beneficiary designation becomes irrevocable upon the death of the first Spouse.
13. Any future Spouse is always considered an “Outsider.”
14. Is valid in all U.S. jurisdictions with no need to amend if State and/or Federal law  or the Trust domicile changes.

Spousal Trusts

Spousal Trusts are a form of estate planning where each souse has his or her own Trust.  Spousal Trusts were all the rage when the Federal Estate Exemption was low ($650,000 per person in 1999 with anything in excess being taxed at 55%) and there was no unified credit (portability of any un-used exemption) that was offered to both spouses.  As such, many lawyers (me excluded) prepared Spousal Trusts, which provided the following:

Advantages:

1. If funded properly, the assets avoid probate.
2. Asset protection for the assets held in a non-at-risk Spouse’s Trust.

Disadvantages:

1. You have to choose which assets are titled in which Trust.
2. Access to the other Spouse’s Trust assets is limited.  Sometime to 5% of income/principal per year.
3. If you divorce, the separately held Trust assets will not be available to you.
4. Taxes. If a Spouse passes and an appreciated asset is held in the deceased Spouse’s Trust, then a new tax basis will be set, so that upon sale any appreciation since the new tax basis has been set, IS taxable at capital gains rates.
5. Additional Lawyer Fees. The creation of additional Trusts upon each Spouse’s passing allows for the lawyer to continue to charge fees.

In my opinion, using Spousal Trusts, except in very few situations, is a wrong approach.  A Family Trust provides all of the benefits and protections of Spousal Trusts without the access, titling, tax and fee problems.

In all cases that I have reviewed, I have always recommended revoking the Spousal Trusts and creating a Family Trust

The parent-child relationship is pretty well defined. Children generally don’t advise their parents. It’s the other way around. However, this dynamic can shift as parents get older and children become adults. This becomes especially prevalent when considering estate planning and elder law issues.

As parents grow older, adult children may start to have certain questions about the way mom and dad have planned ahead for the eventualities of aging. Being aware of what plans have been made opens the door for a conversation about what planning is left to be considered to make sure their wishes are carried out as they’d like them to be.

What’s Next?

Once an adult child comes to the conclusion that a discussion is needed with aging parents, determining how to proceed can be difficult. It’s not easy to reverse roles and ask parents to provide their children with sensitive financial information. One way for a child to approach the subject would be to explain their own estate planning efforts. By telling parents what you have done and why, you can then ask them what they have done. The question would arise naturally and organically. You have just explained your estate plan to your parents, so they may feel compelled to explain their plan to you.

This interaction is in their best interests, and it’s not just a conversation about the eventual transfer of financial assets. There is the matter of long-term care to take into consideration. Most Americans will need assistance with their day-to-day needs at some point in time. You may in fact notice that your parents are starting to have trouble getting around. This is something that impacts the entire family because most of the living assistance received by senior citizens comes from family members, friends and neighbors. When this is not possible, seniors often enter assisted-living facilities. Medicare does not pay for an extended stay in an assisted-living community or nursing home. These facilities are extremely expensive, and many seniors may not understand the extent of the financial burden.

Sense of Relief

Once you have expressed an interest in the planning efforts of your parents they may actually be quite relieved. You are demonstrating a high level of maturity as you tackle a difficult subject as a caring family member. As you gain an understanding of their existing plan you can make suggestions.

When your parents are aware of the fact that you want to be of assistance as they enter into the later stages of their lives, a new type of relationship may develop. They will know they can count on you as their own capabilities wane, and this can strengthen the parent-child bond.

Bob

The death of Steve Jobs really made me stop and think about how I will be remembered long after I’m gone. I think this is a fundamental question that we all have. We all want to be remembered well and not just be another faceless name on a family tree or a name on a headstone in some remote cemetery.

When Steve Jobs passed away, I was amazed to see the immediate shift in the news cycle on every major channel. One minute I was watching Piers Morgan on CNN, and the next minute the news that he had died changed everyone’s news coverage to Steve Jobs and his legacy. It was pretty incredible for a business leader to receive this much attention. I can understand this type of attention for a US President, a famous actor or a member of the Royal family, but this type of coverage shows the impact he has had on our society.

I was also encouraged by the impromptu memorials that popped up at Apple stores all over the world. It reminded me of what we saw when Princes Diana and Ronald Reagan died. It was a very impressive show of love and support for this great man.

Now, whether you’re a fan of Apple or not, you have to agree that Steve Jobs was a visionary man that changed the way we all live, work and communicate with others. Very few people can impact one industry in their lifetime and yet he was a pioneer in many. He revolutionized the personal computing industry with Apple and the Macintosh computer. He changed the animation world forever through Pixar. He turned the music industry upside down with iTunes. He shook up the portable music market with the iPod. He woke up the mobile phone industry with the iPhone. And, he made the mobile computing industry available and fun for millions of people with the iPad and the iPhone.

I really liken him to someone like Michelangelo, Galileo, Christopher Columbus, and others that not only impacted our lives but changed them forever with their art and discovery. I really don’t think we realize now how future generations will remember this man and all that he’s done for our society.

Now the tough question is, “How will you be remembered?” I don’t ask this to discourage you. The reality is that most of us won’t have this type of impact on our entire society, but we can on our families. I encourage you to take chances in life, be bold and most of all love your family with all that you have. You may not invent the iPhone, but to your family you are just as important. So start working now on your legacy to ensure that you are remembered well by all those that matter to you!

Bob Mondo

Often, estate planning attorneys and clients ask why use a trust as the primary dispositive vehicle when a will could transfer the assets. There are many reasons.

• Incapacity. As we learned in law school, “a will speaks at death.”  In other words, it has no impact prior to death. So, even if the will transmits wealth at death, it cannot control the management during life. A Power of Attorney can do so. However, practically speaking, people are much more reluctant to rely on a POA than to transact business with a trust.
• Probate. In some states probate is time consuming and/or expensive. In other states it is less so. However, in almost all states, probate is a very public process. Nosy neighbors can go down to the probate court and see the client’s finances. Some people may not like that. Increasingly, clients are sensitive to the privacy issues. They do not like that the National Security Agency may be keeping their data and they may not choose to make all of their financial data public when there is a good alternative.

As an example of how easy it is to find information about a will, go to the Fairfax County, Virginia courthouse and you can see George and Martha Washington’s wills. Not only can anyone walk into the courthouse and see the wills, they can even go online and see them.

And it is not just the wills of historical figures that are available. Everyone who dies while a resident of a location has their will on file with the local probate court. For example, here is a link to the will of Philip Seymour Hoffman. (http://www.extratv.com/2014/02/19/philip-seymour-hoffman-s-will-reveals-wish-for-son/)

With a trust, the terms are private. The assets are private. Some clients may not care about costs or delays after death. However, many of those will care about the privacy. Most of us do not think about how anyone could find out that very sensitive information. Who did they leave their money? How much money did you have? The person will be dead, but their beneficiaries have to live on with everyone knowing their business.