david edwards estate planning elder law

Stop Thief! 10 Things That Can Steal From Your Estate

If you’ve ever been robbed like I have, you know that awful feeling of violation and loss of control. More than the material things that are stolen, the loss of peace of mind and sense of security can have lasting effects.

When I had just started practicing law, I came home one night and saw muddy footprints on the carpet. I thought, “When did I track in mud?” Then it hit me — someone had broken a window and robbed my apartment! They didn’t get much; I didn’t have much for them to take. When it comes to your estate, there is a lot at risk.

As estate planning attorneys, we can’t protect your home, but we will work to protect your wealth and your legacy — protect it from thieves who could steal it.

What Is Robbery?

Robbery is when something of value is taken. When talking about estate planning, you can be robbed of money, but also so much more. You can be robbed of peace of mind, relationships, or even memories. There is a lot at stake if you don’t plan ahead.

Ten Thieves That Can Rob Your Estate

When creating a plan, it’s important to keep in mind these ten things that can do real damage to your plan:

  1. The IRS — Will your heirs pay unnecessary taxes? Well qualified estate planning attorneys should make sure your assets are set up to avoid issues like double taxation.
  2. Lack of organization — If you don’t have a plan for your wealth, you can’t control what happens to it.
  3. A spouse’s remarriage — If your spouse marries again, what will happen to your children’s inheritance? If your spouse has more children, will your wealth be divided among them as well?
  4. Your kids not being ready for wealth — If you were to die tomorrow, would your children be able to manage their newfound wealth? A thorough plan includes how much your kids get and when.
  5. Your kid’s divorce later in life — Estate planning attorneys make sure your wealth goes where you want it to go, regardless of the marital status of your children.
  6. A lack of training and communication with your family about your plan — I knew of a woman in her 70’s who lived by herself. Her husband had passed away a few years earlier. She had a daughter and two sons. One day she fell, broke her hip and had a mild stroke. She could no longer care for herself. The daughter who lived in town began to help her out. This daughter was never very good with money, but the family thought it made sense to grant her the Power of Attorney because the other kids lived out of town. As the daughter continued to care for her mom, many items from the house disappeared. Her brothers thought she was taking the stuff, but she adamantly denied it. Unfortunately, after the mother’s death, the siblings never spoke again.
  7. A lack of professional guidance you can trust — A very blessed man had been married 30 years to the love of his life. She was never considered a “stepmother” but a truly loving mom to his children. He completed a “do-it-yourself” estate plan. When he passed away, the family found his plan vague, confusing and lacking detail. His wife remembered him saying, “You’ll never want for anything.” His kids remembered hearing, “You will be treated fairly.” As the plan unfolded, both his wife and his kids thought the other side was being greedy and not honoring his wishes. On the brink of court, after two years and lot of legal fees, they compromised and settled the dispute. Sadly, the stepmom and the step kids never spoke again.
  8. Future lawsuits or liability — If you own a business, is your liability insulated from the business’ liability? What happens if your beneficiaries are ever sued? Estate planning attorneys can provide answers and solutions for these types of issues.
  9. Nursing home costs — The skyrocketing costs of aging in America necessitate your plan include provisions for long-term care for you and/or your spouse.
  10. Outdated legal documents — Effective estate planning attorneys help you keep your plan current so it can do what you intend for it to when the time comes.

What Would You Do If You Knew a Thief Was Coming?

When my old apartment was robbed, I didn’t expect it. It just came out of the blue. I have a friend who was in a different situation a while back. She lived in a great neighborhood. It was always very safe and quiet. But there was a time when houses started getting burglarized. Week after week, it was someone else. Would her house be next? She couldn’t know for sure, but she took steps to protect herself by installing a security system.

Nobody likes to think about it, but Benjamin Franklin told us only death and taxes are certain in this life. You know the time will come eventually. What estate planning “security system” do you have in place? If something isn’t right with your plan, would you even know it? Effective estate planning attorneys create and review existing plans to protect all you’ve worked so hard for.

How Innovative Legal Help Saved the Relationship of Two Sisters

This is the real life story of two sisters, an annuity, nursing home costs, and why Medicaid Planning matters.

Mom did not have a lot, but she owned her home, had a steady retirement income, and had purchased two annuities. Each in the amount of $50,000.

Each daughter was named the beneficiary of “their” annuity and would, therefore, receive the $50,000 from the annuity when Mom passed away.

The older daughter fell on hard times and asked her mother if she could cash-in the $50,000 annuity. Mom agreed and the older daughter received her $50,000 “inheritance.”

The younger daughter, not needing her money, left her annuity in place as Mom had originally intended.

Unfortunately, several years later, Mom had a stroke and had to enter a nursing home. She privately paid for the nursing home costs until nothing was left but the home and the younger daughter’s $50,000 annuity.

But the annuity wasn’t truly the daughter’s. Mom was listed as the owner because she was still alive and would, therefore, have to spend the younger daughter’s inheritance before she could apply for Medicaid.

Of course this was very upsetting to the younger daughter. She was the one who hadn’t requested her money early. She was the one following Mom’s original plan for the money to pass upon her death. And yet, she was the one “being punished” financially by her Mom’s stay in the nursing home.

A Resolution

One of our attorneys sat down with the sisters for several hours listening to their story and devising a plan. In the end, we were able to develop a strategy that would allow an immediate transfer of the house to the daughter (thereby equalizing the daughters’ inheritances) while qualifying Mom for Medicaid several months later.

The mother continued to get the care she needed as she aged, and the daughters got a resolution to a very sticky situation. It was a very satisfying experience for our attorney and the two sisters!

We work with families everyday to find solutions to the challenges of estate planning — complicated family circumstances, business and farm succession planning, paying for a nursing home. It is our greatest pleasure when we can help families figure out legal solutions for complicated problems.

What Should You Do Next?

If you want to learn more about planning for exorbitant nursing home costs, check out the following resources:

  1. Download a copy of our Medicaid FAQ (that ran in a local publication) to learn more about paying for nursing care, qualifying for Medicaid, etc.
  2. Sign up for our Medicaid Planning e-course. This series of emails will teach you the basics about planning for Medicaid and applying for the benefit, plus provide you tangible steps to get started.
  3. Attend a free workshop to learn more about effective planning. At our workshop, How to Protect Your House and Life Savings from the Nursing Home, you’ll learn the five ways to pay for care, how benefits like Medicaid or VA can help get the care you or your loved ones needs, and the three keys to creating a “Good Care Roadmap” to protect your family and life savings. Check for upcoming dates here.
  4. If you need help right away, just give us a call at 217-726-9200. We understand that many cases like these are urgent. Our Benefits Coordinator, Melissa Coulter, will be more than happy to discuss your situation and what immediate actions should be taken.
Cinderella and estate planning

7 Important Things Cinderella’s Father Could Have Done Better

The secret to avoiding disaster in the Magic Kingdom — plan ahead.

So much of parenting is about planning and anticipating problems BEFORE they happen. And trips to Disney World are no exception. We know from experience that our kids get worn out if they days are too long. So, now we purposely build in days to quit early and have some down time back at the pool. On our most recent trip, I was reminded once again of how disastrous bad estate plans can be when minors are involved. Cinderella’s father made her life even more difficult by not anticipating what would happen if he died. Keep reading to find out what he could have done differently. But also be sure to download our FREE Kids Guardianship Kit. (Or pass it on to your adult children for your grandkids’ sake.)

7 Important Things Cinderella’s Father Could Have Done Better

You’re probably familiar with the age-old story — Cinderella’s mother dies when she’s a young child, leaving just her and her father. Sadly, while Cinderella is still a minor, her father dies after remarrying a woman with two children of her own. His estate is left to his widow. (A regular occurrence in the real world.) And we all know what happens next: the wicked stepmother takes control of the estate of the benefit of herself and her own daughters. Treated as a servant in her own home, Cinderella is reduced to befriending rodents and birds.

Unfortunately, attorneys see these sorts of real life disasters everyday. The parents of modern day Cinderella’s aren’t bad people. They just failed to properly plan. They certainly didn’t wish for bad things to happen to their children. But that’s what happens when you don’t plan for things that are common to the human experience. (Like death.)

Here are 7 estate planning actions Cinderella’s father could have taken to better protect her once his wife died:

  1. Name guardians who share his values. See our Child Raising Priorities Checklist in our Kids Guardianship Kit to help you decide what’s most important to you.
  2. Leave instructions for the guardian about how he wants her raised. This could include schooling preferences, where he wants her to live, religious upbringing, etc.
  3. Don’t think of planning as “all or nothing.” All of the father’s assets didn’t have to go only to the second wife OR only to his child. He should have considered dividing the assets between the spouse and Cinderella.
  4. Name an “outside” helper. Even in the best of circumstances, putting a stepparent in control of the stepchild’s money (or vice versa) can lead to frustration or awkwardness. A professional trustee (such as a bank, CPA or attorney) could have better balanced the interests of both Cinderella and her stepmother.
  5. Prioritize key needs for Cinderella such as future educations costs, wedding expenses, a down payment for a home, etc. Setting aside priority funds in a trust will make sure they are not spent on other things.
  6. Pass on a non-financial legacy. Cinderella’s father could have done a better job in transmitting his values, traditions, stories, faith and experiences, and this should have been especially important because Cinderella was so young when her mother died. By passing on a non-financial legacy, he could have insured that her mother’s things — photos, jewelry and other important “belongings” or memories were passed to Cinderella and not the stepmother. Read about 10 Non-financial Planning Issues You Should Consider here.

The type of planning that best protects minors when the unthinkable happens requires attorneys to act as counselors for the client. This also often involves collaboration with other professional advisors. By working as a team, these professionals who deal with real life Cinderella stories everyday can develop solutions for issues such as a creditor protection, remarriage protection, guardianship and special needs.

An estate plan is not really about YOUR DEATH. It’s about your CHILDREN’S LIFE if you’re not there to protect them anymore. You do everything you can to protect them right now — bike helmets, the best car seats, safe cars, healthy food, etc. but what if the unthinkable happens? Will all your protection go away if you go away? Preparation now avoids extra heartbreak and tragedy later. Read a real life story about lack of planning and the death of a young mother here.

Download our free resource to help you get started thinking about naming guardians for your children. Oftentimes, this is the single hardest activity a parent will engage in. We give some guidance in this document, but we give even more guidance in person when clients go through this process with us. As always, feel free to give us a call at 217-726-9200 if you have any questions!

death parent

Case Study: When a Young Mother Suddenly Dies

The Brock’s were just an average young family in the 1980’s. The father, Robert, had been to Vietnam and back a decade earlier. The mother, Margaret, stayed at home with their two young boys, James and Steven. The family lived in a modest ranch house in middle America. But one day their normal life unexpectedly came to an end when the complications of a routine surgery left Margaret in a coma. Her sons were only 8 and 6 at the time.

The Death of a Loved One is Never Normal

Without health insurance or life insurance, Robert faced a very difficult situation as his wife lay in a coma. Margaret didn’t have any written health directives. Only Robert knew that Margaret didn’t want to be kept alive through artificial measures. After less than a week, Robert made the agonizing decision to remove Margaret from life support. Margaret’s parents and sister disagreed with how quickly he made the decision, which made a tragic situation even worse.

Margaret’s parents continued to be a part of their grandsons’ lives. They tried to make peace with her husband’s decision. But Margaret’s sister never forgave Robert. Margaret’s sister also lumped James and Steven in with her anger towards Robert. Instead of being a link to their missing mother and helpful part of the grieving process, she severed the relationship. The boys had not only lost a mother. They had now lost an aunt, an uncle and their cousins as well. Potentially powerful relationships in the healing process were gone.

Having already made the most difficult decision of his life, Robert Brock continued to face the harsh reality of life after his wife’s death. The bills from his wife’s surgery, hospital stay, and death piled up. However, Robert couldn’t sell the house to relieve some of that burden. Without a will, part of the house now belonged to the two boys and could not be sold until the boys were of legal age. Robert was forced to take on extra accounting work at night for a local small business. The boys would go with him after school and be expected to occupy themselves while their father worked an extra 5 nights a week.

A Cautionary Tale: What They Wish Could Be Different

Following the example set by his father, the youngest son, James, never dwelt on what happened or what could have been. He simply continued on with life. Now an adult himself, sometimes James wishes his father had handled things differently. For example, his father never told the boys the exact date of their mother’s death. James is still unsure of the date two decades later. For the most part, though, Robert and his boys chose not to let this tragic event define them in a negative way.

There are also times when James misses having motherly advice, but what he misses the most are the stories that define a lifetime. The story of his birth, stories from childhood, and stories from his mother’s life — all of those died with his mother (and when his aunt walked out of their life). Other than a few photographs, he has nothing left of her. His father’s way of dealing with the overwhelming sadness of the situation was to get rid of everything and sweep it under the rug. While Robert may have thought this was best for him and his boys, it left a big hole in their life.

What Good Is a Plan During a Tragedy?

An estate plan cannot erase the grief for the family left behind when a loved one dies, but it can ease the transition and facilitate healing. Here are some tools that families can use to help make things easier during the devastating and sudden loss of a loved one:

  1. Legal documents clearly stating end of life issues can ease the burden on a spouse who is faced with an agonizing decision like the one above. These documents also could have given other family members peace of mind knowing that their sister/daughter’s wishes were being carried out. In the end, this could have preserved important family relationships for those left behind in the distressing wake of loss.
  2. Preserving memories or special items that lay a foundation for adulthood can mean a lot to the children left behind, but preserving the stories behind those items through letters or audio recordings would have been priceless.
  3. Life insurance could have eased the daily financial stress of losing a spouse and raising children alone.

The death of a spouse or parent is never easy, but there are many things that can make sudden and devastating events, like the one above, a little easier for those left to live life without a very special loved one.

david edwards estate plan

Secrets: 5 Things Your Adult Children Need to Know About Your Estate Plan

Parenting often involves keeping secrets, especially when the kids are little — remember all the secrecy surrounding Christmas or birthdays?

Back when my daughter was 4 years old my wife and I kept a big secret from her. For her 5th birthday we surprised her with a trip to Disney World in conjunction with an estate planning conference! (She was excited about the first, while I was pretty excited about the second.) It was hard to keep the secret at times, but it sure was a fun surprise when we pulled it off.

Estate Plan Secrets

Secrets can be fun. But where estate planning is concerned, they most definitely are not. Sometimes it’s hard to know what our kids may or may not know about our plan. Walt Disney’s daughter was once asked by kids at her school what it was like to be his daughter: She came home that night indignant, telling her dad, “You never told me you were Walt Disney!” Sometimes things that seem obvious to us might not be so obvious to our kids.

5 Things Your Kids Need to Know About Your Estate Plan

What do your kids know or not know about your estate plan? Here’s a quick checklist to consider:

  1. Burial — Do your kids know whether you want to be cremated or buried? If you want to be buried, where do you want to be buried? Have you already purchased a cemetery lot?
  2. Who to Call — Do your kids know who your attorney is or how to get a hold of him/her? Can he help tie up loose ends or was he only used to fill out forms and make them official during planning?
  3. Assets — Do your kids and/or family know what your assets are? If you suddenly have a stroke or heart attack can they easily find that information?
  4. End of Life — Are they clear about your wishes for ending treatment and “pulling the plug?” Do they know how you feel about organ donation?
  5. Your Plan — Do they know where to find your will, trust and/or powers of attorney? (And if they’re in your safe deposit box or home lock box, can they get in? Do they have the key or the combination?) Will your kids be surprised by your plan? (How you divided assets or whether you gave to charity…) Unfulfilled expectations can mean conflict between your kids or lifelong heartache for a child who misreads a plan as being a symbol of how the parent felt about them.

5 Tips to Make Sure There are No Secrets About Your Estate Plan

  1. Talk. Have conversations with your kids about aging, death and what will happen. There are good conversation starter resources at EngageWithGrace and The Conversation Project. You can also read our post on the subject HERE. The holidays, when families gather together, are a good time to get these conversations started.
  2. Find an experienced attorney. Work with an attorney who keeps your plan up to date through a membership program or a maintenance plan. That way, even if you don’t want to share all of your financial information with your kids now, the attorney will have it to provide them with later. Read about our program HERE.
  3. Don’t assume. Recognizing if your kids will know what to do or how to do it once you are gone can be really hard. Tell them what you expect now. Things like which advisor to rely on or “take care of your little sister” can go a long way.
  4. No surprises. Give your kids the overview of your plan, so they know what to expect. News such as, “I’m going to leave your brother the farm,” is better with an explanation from you now. Your attorney can help with this, providing as much or as little detail as you want.
  5. Don’t just fill out a form. Include purpose statements in your will or trust. Tell why you did what you did, or explain that “it is my intent” that the plan work a certain way.

Estate planning works much more smoothly when there are no secrets or surprises. Save your family a lot of money and heartache by doing a little work now. Read about how to avoid an estate battle after you’re gone HERE.

3 Things That Can Ruin Your Estate Plan

Don’t be caught with an out of date Will. Keep the 3 L’s of estate planning in mind.

You’ve finally finished creating your Will with your attorney – congratulations! It’s a big undertaking. You’re probably thinking it’s time to stash it in a safe place and forget about it. As long as your attorney has a copy, you’re okay right?

Wrong.

It’s important to update your Will at least every three to five years (sometimes more often as laws or circumstances change). Taking the time to update your Will can ensure that your legacy gets passed on according to your wishes and can also eliminate family disputes upon death. If you’re not sure whether your Will needs to be updated, it’s best to follow the 3 L’s of estate planning. Many of the changes any estate plan faces can be summed up by examining the following 3 things: life, law and learning.

Life

What has changed in your family, your health, your job status or your finances since your last Will was created? Have you purchased property or a business? Have you sold a business or property? Have you purchased a new car, boat or art? A lot can happen in 3 to 5 years, especially as we age. A great example would be if a divorce or remarriage happens within the family. This can impact family members emotionally and can restructure family organization. A timely update to your Will can help you avoid family conflict and lengthy court time for your family after you have passed away. Life changes warrant an updated Will. (When it comes to life changes, don’t forget your beneficiary designations on things like life insurance!)

Law

What legal or tax changes have occurred in federal or state law since your Will was drafted? Have your federal tax laws changed? Have your inheritance or death tax laws changed? These are all questions to consider as your Will ages. Changes in federal or state law can directly impact your Will. Changes in the law warrant an updated Will.

Learning

What have you learned since your last Will about your family and how they handle money? Perhaps you’ve learned that your beneficiaries mishandle their own money and tend to overspend. Or maybe they’ve gotten a big promotion at work and seem too busy to allot time to executing your Will. What legal strategies do estate planning attorneys have now that may not have been available or common when you did your last Will? Learning new things can warrant needing to update your Will or Trust.

If it has been some time since you last thought about your Will, it’s probably time to consider an update. Life happens, laws change, and the most effective estate plans continue to evolve over time. If you have questions or concerns about your existing Will, please feel free to call us at 217-726-9200 or email us at info@edwardsgroupllc.com with your questions. We will be more than happy to help you. If you’d like to learn more about our Dynasty Program, which helps Edwards Group clients make sure their plans are up to date and evolve over time, click here.

The St. Louis Rams & Beneficiary Designations

When the rules are in writing, you have to follow them. Unless you’re the NFL. 

I am a St. Louis Rams fan. Loyal from the time they arrived in St. Louis after failing to get a new stadium in Los Angeles. Like all Rams fans, I was really upset when they left St. Louis, even after witnessing a decade of historically bad football.

For those unfamiliar with the situation, the lease the Rams had allowed them to relocate to Los Angeles this past January. The Governor of Missouri appointed a task force to try and negotiate a new, long-term stadium deal to keep the Rams in St. Louis. The task force ultimately came up with an actionable proposal on a new riverfront stadium for the Rams.

But after the proposal was submitted, the NFL’s assigned committee recommended that teams in San Diego and Oakland (two cities that essentially had no stadium proposals) be allowed to move to L.A., instead of the Rams. Throughout the task force’s work, it appears the Rams’ ownership was uncooperative. They did not meet with the task force, talk to the media, or talk to the fans. All of this was in apparent disregard of the NFL’s relocation guidelines requiring good-faith negotiations and attempts to maximize fan support in their current home community.

In spite of all this, the league allowed the Rams to relocate to L.A.

It seems laughable to suggest that the NFL relocation guidelines were followed. An owner who refuses to take part in negotiations is not negotiating in good faith, and an owner who refuses to talk to fans or the media for four years after his intention to move has become public, is not operating in a manner that would maximize fan support.

As the Rams made the number one pick in the NFL draft this year, the fans in Los Angeles got to cheer on their new quarterback. I thought to myself: based on the NFL’s own guidelines, he should have been St. Louis’ new quarterback. I didn’t like seeing something end up in the wrong place because it seems unfair. 

Estate Planning Involves Written Rules That Have to be Followed

Unfortunately, we see unfair things all the time in our firm. In the estate-planning world, unlike the club of pro football owners, we can make written rules and trust that they will be followed. Unfortunately, too often people don’t pay close attention to the rules that are put in place through their own plans and beneficiary designations.

For example, in 1996, a man named Warren Hillman named his wife as beneficiary on his federal employee’s life insurance policy. They later divorced, and Mr. Hillman remarried four years later, but he never updated his beneficiary designation. When he died, his widow sought to claim the payout, but she was denied because she wasn’t the beneficiary. The dispute over that policy made it all the way to the U.S. Supreme Court. In 2013 the court ultimately granted the death benefits to the ex-wife because she was the listed beneficiary. (Read about more court cases involving problems with beneficiary designations on life insurance policies here.)

It’s pretty easy to picture an ex-wife enjoying money that a widow thought was rightfully hers; the same way I picture the fans in L.A. enjoying the sun and the Rams. Every day, we help clients coordinate their beneficiary designations with their estate plan to make sure everything ends up in the place you desire. After you’re gone, the best way to make sure your family knows your wishes is to leave them in writing. 

Be Sure to Update Your Beneficiary Designations in Writing

Your things (and your family) are far more important than a football team. Therefore, it is vitally important that you make sure your beneficiary designations are up to date and your estate plan is current.

Life is constantly changing, and when it does, your plan needs to be updated to reflect those changes. At Edwards Group, we have a special program that helps make sure your plan stays up to date. Read more about our Dynasty Program here.

If it’s been a while since you’ve updated your plan, give us a call at 217-726-9200 or plan to attend one of our upcoming workshops.

 

 

lottery ticket

How NOT Winning the Lottery Makes Your Life Easier

Big changes in your life may require updates in your estate plan. What kind of big changes? And what should you do about it?

by Attorney Chris Flynn

I didn’t win the Powerball, either…

And that’s okay. Can you imagine how much life changes after something like that? The good news is, since I didn’t win the largest jackpot in US history, the things I’m doing now, and the planning I’ve done for later, don’t have to change at all. I’ve worked with several clients recently though, who have gone through big changes in their life, some of whom have received an inheritance (typically less than the recent $1.5 billion jackpot), bought a new house, had a loved one get married, or become disabled.

Any of these types of changes in your life could mean that you need to update your estate plan.

We frequently help clients update their plan after big life changes. By updating your plan periodically, you ensure that:

• any new money or wealth will go where it needs to go instead of being eaten up by things like nursing home costs or taxes.

• any planning you did based on your prior home is also done for your new (or second) home.

• your child’s inheritance can be protected in a trust where things like future divorces, long-term care costs or creditors cannot “steal” it away.

While we often help clients who already have done planning elsewhere to update their plans, our Dynasty program has proven to be a simple and cost-effective way to make sure our clients’ plans are always up-to-date. Through this program, we follow up with our clients regularly to confirm that their plan is up to date with the law, but also that their plans capture any changes that have occurred in life, health or assets.

Even more important than updating your current plan, is making sure you have a plan in the first place. Our Intro to Edwards Group: Wills & Trusts Orientation is a perfect way to get started if you don’t have a plan (or if your plan is quite old – read about the risks of an old will here). Give us a call at 217-726-9200 and RSVP for one of our upcoming educational workshops. By attending a workshop, you’ll receive $200 off your initial meeting fee (if you schedule your appointment within 30 days of the workshop). We do this so you’ll know, before spending your hard-earned money, if we’re the right firm for you. Attending a workshop makes the planning process easier and more effective.

The greatest threat to an effective estate plan is not taking any action at all, so take a step today and call us t 217-726-9200.

5 Problems Caused by VA Financial Planners

There are financial planners out there who hold themselves as VA planners offering “free” VA benefit advice, but their “free” advice often comes with a hidden price.

Non-attorney Planning Tactics Can Backfire

David and Chris were in Atlanta a few months ago at the Academy of VA Pension Planners. It’s one of many professional organizations that David belongs to in order to make sure the firm serves our clients better than anyone else. The AVAPP solely focuses on helping Veterans, and their families, get the benefits they earned in service to their country.

Did you know that only 28% of Veterans who qualify use their benefits? And as one of the only law firms in Central Illinois to be accredited by the VA, we want to make sure that everyone who has served our country gets to age with dignity and receive the best care possible.

There are some financial planners who hold themselves out as VA planners offering “free” VA benefit advice. Some are very knowledgeable, but there are some problems with the “free” advice that you need to watch out for.

5 Tactics that Non-attorney VA Planners Use

1. Transferring the house to the kids

Maximizing VA benefits sometimes means rearranging assets. One mistake we have seen is transferring a house to the children. While this will help work for VA benefits (allowing the house to be sold without messing up benefits), there are problems with this strategy. One problem is when the house is later sold, the kids will pay capital gains taxes that could have been avoided. By putting the house in a Veterans Asset Protection Trust, we could get the VA benefits but also avoid the capital gains tax later.

2. IRAs and taxes

Because the VA has asset limits, sometimes IRA accounts must be moved to qualify for benefits. Without proper tax planning, some families incur a huge tax bill that could have been avoided. Instead, working with an experienced attorney can help you consider all the planning options and the tax impact.

3. Annuities with long surrender charges

Often, the “free” VA advice comes with a recommendation to tie up assets in an annuity with long surrender periods. Is anything really “free” in this world? Unfortunately, some families do not realize that the VA financial planner they are relying on is ultimately trying to sell them costly and expensive annuities that tie up their assets far into the future. (This is how the financial planner makes his living.) Instead, a Veterans Asset Protection Trust can help you protect and arrange assets, while allowing your family free access to the investments held in the trust. You need to consider all of the legal and financial tools to see which is best. Unfortunately, non-attorneys often ignore legal tools, such as trusts, even though they may be the best option to help qualify for benefits.

4. Transferring assets to children

Some non-attorney planners transfer assets to the kids so the client can get VA benefits. So, what is the problem with that? If the client needs more care down the road, the funds may have already been spent by the kids. Plus, the gift could keep them from qualifying for Medicaid. (And 70% of nursing home residents use Medicaid to pay for their care.) Transfers of assets must consider both the current goal (VA benefits) and future needs (such as Medicaid benefits to pay for nursing care). By working with an attorney experienced in both VA and Medicaid planning, you can have a flexible plan that considers future health needs.

5. Messing up wishes

Another strategy that non-attorney planners use that can backfire is to transfer the parent’s money to one child in order to qualify for VA benefits. However, that strategy then changes the entire estate plan because one child legally ends up with all the money (unless they voluntarily share it with their siblings, and sadly, we’re experienced enough to know this happens much less often than you think). Instead, once again, the Veterans Asset Protection Trust is a great tool to preserve your wishes after death, but still help you qualify for VA benefits now.

Most of these issues (and more) are discussed in our Elder Law Packet, on pages 7-9: 12 Reasons Not to Give Your Property to Your Kids Now.

To request your free Elder Law Packet, call 217-726-9200. And, as always, if you have any questions at all, please feel free to give our office a call. We will be more than happy to talk with you.

Lesson #2 from Robin Williams – Your “Special Stuff” List

Another way (see the first way here) in which you can minimize fighting amongst your family after you’re gone is by creating a “special stuff” list before you go.

Creating a “Special Stuff” List Can Minimize Fighting Amongst Your Family After You’re Gone

Last week, we talked about having “The Conversation” with your kids and how it can really increase the chances that things will go as planned after you’re gone. This week we are really excited to offer you a special resource that will help you decide who should get what special possessions and heirlooms! (Keep reading for the FREE resource.)

Many families fight over the personal property “stuff” as much as they fight over money. (Sometimes even more than they fight over money.) When it comes to preventing a big fight after you die, it’s not enough to deal with the financial items. You must deal with property that has emotional or family value.

Because of this, I encourage clients to create a “special stuff list” that directs certain items to the people they want those items to go to. This list, which is officially called a Memorandum for Distribution of Personal Property, is then incorporated into the Will or Living Trust.

7 Things to Consider When Making Your “Special Stuff” List

1. What did your parents or grandparents pass down to you that you want to pass on?

2. What items bring back the most memories of your family time?

3. Have you discussed with family what they might want? Some families have a “lottery” style selection process where they openly discuss item by item what they may want. Others prepare a “fire inventory” list of their belongings and then send copies to their children, requesting that the children mark the items they want on a scale from 1-10 with 10 being they want that item the most. Once the children return their lists to the parents, the parents can then more adequately assess who will get what.

4. How will you preserve the stories behind the items? Write out the story, record a video or audio clip about it. Even a few short sentences will mean a lot when you’re gone.

5. Don’t rely on Post-it notes, masking tape or just assume, “The kids know who gets what.” This just doesn’t work!

6. Make sure your “special stuff” list or letter is signed and dated, with copies sent to your attorney. Also keep copies with your Will or Living Trust paperwork.

7. In order to better identify items, take photos and include them with your “special stuff” list.

A Few More Things to Consider…

While creating your list, don’t assume the things you find valuable will be the same things your family finds valuable. It’s always better to communicate about what you want to leave, and to whom, beforehand. Maybe you want your granddaughter to have your birthstone earrings, but maybe she’d rather have the old battered, blue pottery bowl that you used to  make pudding in together. You might never know the bowl was meaningful to her without a conversation, and you might even throw it out without any consideration, thinking, “Nobody’ll want this ol’ thing.”

DOWNLOAD Your FREE “Special Stuff” List Worksheet

It’s very difficult to see families torn apart by issues like “who gets Grandma’s yellow pie plate?” Our firm is always seeking ways to make planning easier for you, and we are really excited about our latest resource: Your “Special Stuff” List Worksheet. Set aside an afternoon to spend going through the worksheet line by line, and you should be well on your way to making sure your family will still be speaking to each other after you’re gone.

As always, if you have any questions, please feel free to call us at 217-726-9200. We will be more than happy to help you in any way possible.