3 Estate Planning Questions to Start 2014

Fresh starts are really nice sometimes. “Out with the old, in with the new” can be energizing. Many people procrastinate when it comes to their estate plan, thinking, “Oh, I’ll never really need it.” But the truth is, everyone will need one at some point.

Why not start off the New Year with some peace of mind and take a minute to reflect on the state of your plan? Here are 3 things to consider heading into this New Year:

  1. Should your plan be changed to reflect changes in your life? Like a change in marital status or the birth of a child or grandchild.
  2. Did you acquire any new assets in 2013 that might impact your plan?
  3. Are your executors and trustees still the right people for the job?

There are many other considerations, but these three are a good start. As always, if you have any questions at all, feel free to call our office. We’d love to speak with you. And be sure to check out our upcoming workshops.

Can your estate plan pass the Down Low test?

What a Child’s Game Can Teach us About Planning…

In our house, the “Down Low, Too Slow” game is very popular. It goes like this:

Give me five (hand slap)

Way up high (another hand slap)

Down low (pull hand away before it can get slapped)

Too slow!!

It always gets a laugh out of the kids. Even after the 10th time in a row!

“Up High, Down Low” is also good estate planning advice. A good plan will include:

  1. NOW – look at your situation, finances, family. What are your goals and risks?
  2. UP HIGH – look at the older generation. When the older generation passes, will they be leaving you an inheritance that could create estate tax problems for you? Will they face nursing home costs that could impact the family? Will their lack of planning give you more stress later or more conflict with other siblings?
  3. DOWN LOW – look at your kids and grandkids. What is their financial situation? How will an inheritance impact them? Will they be ready for it? Will your daughter-in-law spend it all? Will it lead to extra taxes for the kids?

A good estate plan considers those older and younger than you. If you’re not sure about the state of your plan, give us a call at 217-726-9200. We’ll be happy to chat with you.

estate planning quiz

Estate Planning Quiz: 8 Questions to Help You Know Where You Stand

The following quiz helps you identify weak spots in your estate planning. For many people an estate plan just means a will, but oftentimes that is not enough to accomplish the goals you have or to protect your loved ones. Honestly answering these 8 questions will help you know if your plan needs more work.

  1. How old is your will? (Changing life circumstances, such as marriages, divorces, etc. can impact old wills.)
  2. Who would manage your finances if you had a stroke?
  3. Is your legal and financial information organized and easy to find?
  4. Do you know whether your estate would avoid probate court? (A time-consuming and expensive process.)
  5. Do you know whether you will owe estate taxes?
  6. If you have an IRA or Annuity, do you know when (or if) your family will have to pay taxes on it?
  7. If something happened to you tomorrow, would your family know what to do?
  8. Are your loved ones (kids, grandkids, etc.) as good with money as you are?

If you don’t know the answers to some of these questions, it’s time to learn more about effective estate planning.

Here are some next action steps to take:

  • Explore our website. Our website is here to be an educational resource to anyone who wants to learn more about effective estate planning. We are passionate about helping people plan because we see the good that can come of it when it’s done properly, and, unfortunately, we see everyday the heartbreak that ineffective (or no) planning can cause.
  • Sign up for our e-newsletter. Our bi-weekly newsletter aims to help people learn more about planning and learn more about Edwards Group. Through this weekly email we share insights and stories about proper planning and why it’s so important. We also know that trust is vital in forming a strong relationship with our clients, so we help people get to know us by sharing things like vacation pics from David‘s latest family trip.
  • Attend a free workshop. Education is a core foundation of Edwards Group, so in addition to our website and e-newsletter, attending one of our free workshops is another great way to learn more about effective planning. This value is so important to us, that you will receive $200 off your Initial Meeting fee just for attending our introductory workshop on estate planning — Wills & Trusts: How to Get Started.
  • Get started today. If you’re ready to jump right in and get started, all you have to do is call us and schedule an Initial Meeting with an attorney. At the Initial Meeting, we will review your concerns and goals, then the attorney will help you understand the unique risks facing your family. Call 217-726-9200 and one of our team members will happy to help you get started.
  • Hope things will just work out. This is, frankly, the easiest thing to do, and sadly, the worst thing you can do for your family. Estate plans aren’t really about you and what happens when you die. They are about what type of life your family will have after you’re gone. Procrastination is the greatest threat to protecting your family. We have designed our process to make it as easy as possible for people to take the next step, but we can’t pick up the phone for you… If the unthinkable happens, will your lack of planning make things harder on your family?

As always, we’re just a phone call away. If you’re unsure of what your next step should be, or even if you need a next step, we’d be happy to chat with you on the phone. We are passionate about helping families just like yours, and it is all we do everyday.

Season Tickets and Estate Planning: When Is It Time to Reevaluate?

The email from the University of Illinois said, “We still have not received your payment to renew your 2012-13 Men’s Basketball season tickets.” But that still didn’t change our decision.

I always had season tickets during college and most of law school. And after a bit of a break, started them again in 2003. But, as life unfolds, situations change and priorities change. Now with kids, 2 and 5, along with a busy law firm, plus trying to find time for my wife here and there, it just didn’t make sense to continue the tickets. As most of you may have noticed last year, we gave an awful lot of them away just because we couldn’t go to the games.

As life unfolds, we need or want different things. And, here comes the estate planning connection: as life unfolds, the type of estate plan you need may change. If you have an old will or trust, it might not fit you as well as it once did. Here are some things in life that should lead to a review of your plan:

  1. Inheritance
  2. Death of a spouse
  3. Changes in your health
  4. Marriage or divorce
  5. Children with marriage problems 

We are here anytime you need a review of your plan. Like I always say, “Estate planning is ALL we do ALL the time!” Give us a call at 217-726-9200 to set up an appointment.

The Unique Planning Needs of Women

Women today have many unique situations that require special treatment when it comes to estate planning. Well, maybe not special treatment, but women need to take extra care that they are protected through good planning. Here are some examples:

Young mom stays home with the kids

Maybe she gave up a wonderful career to be a full-time mom; maybe she’s even a homeschooling mom. If something happens to her husband without good planning, she may be forced to go back to work and send the kids to full-time school/preschool. A will, a trust and plenty of life insurance will provide the protection she needs.

Newlywed helps put husband through medical school

She put her own education on hold to work full-time knowing that once he’s got the MD she can go back to school and do whatever she wants. But if her husband dies without a plan, she may be left without a breadwinner and without the education she planned to get. Add a baby to the mix, and you really have a stressful situation. The husband’s student loans die with him, but so does the income they had counted on for the future.

Homemaker left out in the cold

She never worked outside the home, but she took care of (pampered, really) her husband, 3 children and now 7 grandkids. If her husband dies without a plan, she may be left with a mortgage, a car loan, horrible job prospects and a tiny social security or monthly pension. Even if they did have plenty of money, she is left with the stress of trying to sort out all the financial details, which, for their 45 years of marriage, he had always taken care of with their accountant, financial advisor, etc. Now it’s dropped in her lap, and she doesn’t know the first place to start. It’s overwhelming.

Single, career woman

In her mid-50’s, she’s doing well for herself — saving for retirement and enjoying life. Suddenly she has a stroke. Without a plan, she has nothing in place to govern who will manage her money or care for her if she becomes disabled. The hospital social worker tries to contact her nephew in Texas, but she’s not seen him for 10 years, and he knows nothing of her situation or goals. She has friends who might be willing to help, but she’s never discussed it with them. And she never took legal steps to give them the power to help. Now a difficult situation goes from bad to worse.

2nd marriage

After getting divorced, she was single for 20 years while she raised 3 kids on her own. Now, at age 70, she’s met someone and married him. She sold her house and her furniture to move into his house. After a few very happy years, she’s shocked to find him dead of a heart attack. She’s even more shocked when his kids demand that she move out of the house and threaten legal action is she doesn’t. Now she is left with finding a new place to live, buying new furniture and trying to restart her life. He had promised to take care of her, but he never took the legal steps necessary to do that.

These stories are based on the real life stories of clients we help every day! And I would much rather help people on the front end of planning and avoid all the heartache that happens if planning isn’t done properly ahead of time. If you’re a woman concerned about your future, please call us at 217-726-9200 today or plan to attend an upcoming workshop. We’re here to help, and planning is ALL we do!

Planning with Life Insurance

We often use life insurance as a tool in helping clients. Life insurance is important in many estate-planning situations, such as the following:

  1. A young family. To help raise the kids and get them through college if a young parent dies.
  2. Business owners. A buy-sell agreement between partners in a business is important. But the agreement may not work without some cash to pay off the owner’s family. Life insurance helps provide that cash.
  3. Blended families. In a 2nd marriage with a new baby? But the husband already has grown children? Life insurance allows him to leave funds to his older children at his death, but still provide for the new baby and his new wife.
  4. Estate taxes. For our clients who are concerned about estate tax, life insurance is almost always considered in reducing it. Why? Because it gives more leverage. For instance, you can give $13,000 to your child (without any gift tax liability). However, if you instead use the same funds through a life insurance trust, that money may buy $1 million or more in death benefits. Proper planning will use pennies on the dollar to transfer money to your family without estate taxes.

QUICK TIP: If you have an old life insurance policy, you should consider having your financial advisor review it. You can probably get a better policy now. (One with more death benefit and a lower premium.) Why? People are living longer than they were 10, 20 or 30 years ago. So, that makes life insurance cheaper.

WARNING: You may have heard that life insurance is tax-free. Life insurance benefits are free from INCOME TAX. However, they will be subject to ESTATE TAXES at your death. If you are concerned about estate taxes, then more life insurance will only make the problem worse. There are specific estate tax planning strategies that we can use to keep the life insurance out of your estate.

Need to have your plan reviewed? Do you know whether your plan has adequately considered life insurance options along with the legal strategies? Call us to set an appointment at 217-726-9200. We will send you our Personal Information Form to fill out and return prior to your meeting. At our first meeting, we will discuss your family’s situation, what planning options may be best, and what it would cost to develop a comprehensive plan.

Brand new to planning and not sure how life insurance could impact your plan or family? Make plans to attend one of our upcoming workshops, Wills & Trusts: How to Get Started. At this 1.5-hour workshop you’ll learn about 6 common pitfalls of planning, which of these pitfalls are a risk to you and your family, and what you need to do to make sure you don’t leave a mess for your loved ones. Call us at 217-726-9200 to RSVP for the workshop.

Pre-nups, Not Just for Divorces Anymore

What does a pre-nup have to do with estate planning? Let me tell you. A pre-nuptial, or pre-marital agreement, outlines how a married couple will handle their assets. It covers more than what happens in a divorce. If we assume the couple will be happily married forever, here are still at least 2 situations that may need planning ahead:

  1. Who will pay the household expenses during the marriage?
  2. How will the assets be divided at death?

As an estate planning attorney, I am working on more and more pre-nups. Here is an example of a situation:

A couple, both in their 50’s, are planning to get married. One is a widow, the other is divorced. Both have accumulated some assets and are having success in their careers. Each of them has a couple of kids. How important is it that their assets end up with their kids, rather than the step-kids? Without planning ahead, it will be very easy for the assets to go to the wrong people. How? Suppose they buy a house or hold bank accounts in joint ownership. The family of whoever dies first will lose those assets, unless the survivor voluntarily shares it with the kids. (Read more about Asset Protection HERE.)

They can protect their wealth and their kids by signing a pre-nup, having an up-to-date trust or will, and paying close attention to asset titling (what we call the “funding” of an estate plan). Then they can have peace of mind while living “happily ever after.”

Who do you know that’s engaged? Particularly if it’s the second time down the aisle, it really is best for everyone to consider a pre-marital agreement. Plan ahead now, and avoid the stress and heartache for the family later.

Your Bucket List for Estate Planning: Why a Trust Might Be Right for You

A recent movie with Morgan Freeman and Jack Nicholson inspired a lot of people to think about their bucket list – the things they would like to do before they die. While a trip around the world in a sailboat may seem a lot more exciting and glamorous than estate planning, thinking about what you want at the end of your life financially, and for those you love, can be even more important than achieving your bucket list. Join me as we explore a different kind of bucket list – one that will insure your loved ones, and the things that you’ve worked so hard for, are protected.

What is a trust?
When most people hear the word “trust,” they probably think of families like the Vanderbilts or Hiltons, but trusts are not just for the ultra wealthy. Established during the Crusades in the 12th and 13th centuries to protect the rights of landowners while away on their journey to the Middle East, trusts are still relevant and vitally important to the work I do everyday in helping my clients achieve their goals. You needn’t be a Rockefeller or a wealthy Englishman to benefit from the level of protection that trusts can offer in our modern life.

Why are trusts important?
I want you to think of a trust as a bucket. And what are buckets good for? They are helpful to put stuff in. When you create a trust, you are in essence creating a legal “bucket.” By placing assets like houses, vehicles, timeshares and farmland into that trust “bucket,” you are insuring that those assets will be managed according to your wishes, which will be written in the trust agreement by you and your legal advisor. Unlike a will, trusts can help protect and manage assets while you are still alive, but disabled in some regard.

How are trusts used?
So, how do you put stuff into the trust bucket? By directing assets into it, such as retitling bank or investment accounts, doing a deed to your house or farm, or changing beneficiary designations on life insurance. For everything that is in the trust bucket, you leave a set of instructions written in the trust agreement. You also name someone to carry out those instructions. That person (or bank or trust company) is called the trustee. The person you choose as trustee to manage your trust “bucket” has a fiduciary duty, which is one of the highest duties in the law, to carry out your wishes and do what is best for you – not what is best for them. They have to act in your best interest. If they don’t act properly, they can be taken to court.

The most important thing for your plan is to think about what you want to accomplish. What are your goals – for yourself and your family? Once we choose the goals (and I help clients do this nearly everyday), then we can see what tools will best accomplish those goals. A trust can often be the best tool to carry out goals such as:

  • Avoiding the delay and expense of probate court.
  • Transferring assets privately after death. (As opposed to a will, which is a public document.)
  • Protecting assets from a divorce or lawsuit.
  • Giving clear instructions for managing your money during your disability.
  • Organizing assets so someone else can help manage them.
  • Protecting assets from being used for nursing home costs.
  • Leaving money to someone who is too young or too unwise to handle it by himself or herself.
  • Avoiding estate taxes.
  • Preventing family fights regarding a family farm or business.
  • Balancing the wife and kids in a second marriage.

A trust is just one of the legal tools we at the Edwards Group use to carry out your goals and dreams. Our other tools include wills, powers of attorney, living wills, contracts, and deeds. A trust is one of the best tools we have to carry out your wishes and plan for a time when you might become incapacitated or pass away suddenly.

Remember, a trust is nothing more than a tool. It’s not a magic document. All it can do is carry out the instructions written in it. And the only assets it governs are those you actually put in the “bucket.” Call us today at 217-726-9200 to schedule an appointment and get started on your bucket list!

Protecting Your Family Like an NFL Lineman: 4 Risks to an Inheritance

The other day I had a chance to speak at the Rotary Club. My topic, like the article “How (and Why) Athletes Go Broke” in the latest issue of Sports Illustrated, was about protecting the money you’ve worked so hard for. There are many ways your spouse, children or grandchildren could end up losing what was so important for you to leave behind. I know you can’t imagine your loved ones blowing your hard earned money (or maybe you can), but sometimes it happens in the blink of an eye. What are some of the risks to an inheritance?

There are generally 4 risks to an inheritance:

1. Lawsuits

The SI article is riddled with stories of lawsuits. Though it may not be something you think about, imagine your spouse, devastated by your recent death, running a red light and causing an accident involving a school bus. In an instant, all that you worked so hard for could be given away by the courts to the injured parties leaving nothing to care for your family in your absence.

2. Divorce

One NFL owner was once asked by one of his players what the most dangerous thing to happen to them financially could be. His answer: Divorce. Many players, who marry their hometown sweetheart, can never imagine a divorce in their future. Even if your son has married the sweetest girl in the world, there is no way to see what the future holds. Would you be OK giving half your hard earned money to her if they end up getting divorced a few years after you pass away? It happens regularly when people don’t plan ahead.

3. Remarriage

If you die, and your spouse remarries, do you mind if part of the money you left is split with the new spouse, or even later left to the new spouse’s kids? This could either be a gold-digger (or “bimbo” as some of my clients like to say) or a stand up, class-act new spouse. But either way, without planning, there is a risk those assets will end up where you did not intend. Your children could even lose access to the money they would need for college.

4. Wild Spending

Lots of quick money means a happy life, right? Well, that’s not what the stats show. Quick money (winning the lottery, getting an inheritance, or multi-million dollar NFL contract) can lead to wild spending, divorce and bankruptcy. If your children end up with large assets at the young age of 20, they could quickly blow it like any upstart professional athlete. If someone isn’t prepared to manage the money, the money will manage them. You’ve worked hard so your kids will be ok without you, but will they really be better off with a large sum of money that has no safeguards?

Nobody likes to think about these difficult issues, but with proper planning these assets can be protected and your loved ones will be protected – even if you can’t be around to do it. Give us a call at 217-726-9200 or make plans to attend an upcoming workshop on the basics of estate planning, so you can make sure your family is protected.