Stress-Free Retirement with Estate Planning

If you are a boomer, then retirement is calling out to you. You may be dreaming about more travel, more time with the grandkids, more golf, more time to do the things you like to do.

What we never think about is getting sick, to the point where we can’t travel or play golf. We never focus on how much money it will cost us to hire someone to take care of us when we can’t do it any longer. We never think about who will help us manage our financial affairs if we are too frail to get out to the bank to get some cash or remember to re-balance our investments periodically, or get to the closing if we decide to sell our house. And we never make choices about what medical treatment we want or don’t want when the prognosis is the dragged out twilight of Alzheimer’s disease or small strokes that rob you of the ability to speak about how you would never want your life prolonged under certain conditions.

Some possible endings in life may never happen – for example, you may die young or you may never have a long, drawn-out illness. But you can make your retirement more stress-free by planning for the possibility of bad things happening down the road. Sit down with your family, your lawyer, and maybe your financial advisor and talk to them about how to make various scenarios less difficult. Most of us boomers have had experience with our own parents or have heard stories about our friends’ parents and how the lack of planning made every decision so much more complicated. Research your options, create a plan and get the necessary documents signed. Then go ahead – dream about the grandkids, the golf and the travel. Enjoy the rewards of planning ahead.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.GronskyLaw.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at RGronsky@Gronskylaw.com. Thank you!

What to Do Before You Visit Your Estate Planning Lawyer

If you took my advice in my last blog entry, you have found an estate planning lawyer with whom you feel comfortable. Is there anything you should do before you go to that first appointment?

If your lawyer sent you a planning questionnaire, you should definitely complete the questionnaire. A planning questionnaire will typically ask about who your family members are, including your spouse, parents, siblings, children, and grandchildren. It will also ask you about your assets, liabilities and how each are titled.

If your lawyer didn’t send you a planning questionnaire (some lawyers go over the questionnaire at your first meeting or send it to you after you agree to become a client), you should start making your own list of assets and liabilities. Your assets are your checking and savings accounts, certificates of deposit, stocks, mutual funds, bonds, jewelry, art, antiques, real estate, cars and retirement accounts. Your liabilities include your mortgages on all real estate that you own, your credit card debt, car loans, and any other loans.

If you have previously done your will, durable power of attorney or advance health care directive (it may also be called a living will or a health care proxy), you should get copies to bring to your lawyer. Add in a copy of all deeds to your real estate and copies of all insurance policies and annuities (along with the beneficiary designations).

Make a list of all banks where you have an account or a safe deposit box and all investment companies where you have an account. Add in the contact information for your accountant, your financial advisor and your doctor. If you have purchased a cemetery plot, write down the name of the cemetery.

Think about who your current beneficiaries are on any currently signed wills and decide how you want to change your estate plan. Are there new children in the picture? A new spouse? Grandchildren? Did one of your beneficiaries die? You should decide who you want to be your executor, trustee of any trusts you create in your estate plan, your agent to handle your financial affairs if you are incapacitated, and your health care proxy who will make medical decisions for you if you are unconscious or unable to speak for yourself.

Your estate planning lawyer will be asking you these questions, either at your first meeting or at a subsequent meeting. You will get more out of each meeting if you are prepared ahead of time.

Depending on their ages, you may or may not want to discuss your possible estate plan with your beneficiaries. You may want your loved ones to know why you are making the decisions that you are making or you may want to wait until after consulting your lawyer who may suggest other options. You may also want to keep your estate plan private until after you die so that you don’t have to face any arguments over your decisions that may anger your beneficiaries and others who believe they should be beneficiaries.

This is just a start and there may be more to do once you have met with your estate planning lawyer. But by following these steps, you will have made a good start.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.GronskyLaw.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at RGronsky@Gronskylaw.com. Thank you!

How to Pick a Lawyer

About 3 years ago, I wrote an article about “How to Pick a Lawyer” which can be found on the internet at http://ezinearticles.com/?How-to-Pick-a-Lawyer&id=164511. The article goes through some ways in which you can find a lawyer in any specialty (start with referrals from people you trust) and lists a few questions to ask each attorney that you may be hiring.

I’ve been a lawyer for over 25 years but no one has ever asked me the questions that I set out in that article. Mostly, I get asked about my fees. In some cases, that’s the only question that I’m asked.

Don’t hire a lawyer because he is the cheapest one around. Likewise, don’t assume that the most expensive lawyer is the best, just because he charges the most.

Make sure that the lawyer that you pick does a fair amount of the type of law that is your issue. Each area of law can be complicated and depending on what your problem is, you may need a fairly sophisticated. This lawyer may charge more, but may also save you a great deal in time and aggravation. Likewise, if you have a fairly simple problem, don't go to the largest firm in town who only works with the biggest clients. If you are a smaller client, they may not give you the attention you deserve.

But, regardless of how easy or difficult your legal problem is, you want a lawyer who treats you like a person, not like a number. What do I mean? You hire a lawyer, you want to be able to speak to your lawyer, not a secretary, not a paralegal. If the lawyer that you want to hire takes a couple of days to just return a phone call, find someone else. You want your lawyer to give you an idea of how long it will take to meet to discuss your problem, how long the process will take, and what you should expect along the way.

Lastly, you should feel comfortable talking to your lawyer. If you get the impression that he doesn’t seem interested in you and your problem, this isn’t the lawyer for you. You should be looking for a lawyer that you can work with for years, since a good lawyer knows other good lawyers in other legal specialties. Your lawyer should be able to refer you to another lawyer if he doesn't practice the type of law you need. You should want a lawyer whom you can consult about all of the legal issues in your life.

Find a lawyer who will make you feel at ease, confident that you have chosen someone that you can consult about your legal needs as your life changes.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.gronskylaw.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at RGronsky@Gronskylaw.com. Thank you!

What is a Life Insurance Trust and Why Would I Ever Need One?

Most people know about life insurance. If you don’t, here’s a quick summary of what you need to know. Life insurance is a contract between you as the buyer of a policy and the insurance company where the insurance company will pay a sum of money to your beneficiary (the person you designate to receive the proceeds of your life insurance policy) when you die. The beneficiary can be your spouse, your children, or your business partner, or whomever you want to receive the money when you die.

If you are a young, married man or woman, you need enough life insurance to support your family in the event you die early. You would need enough money to pay for your children’s college tuition, for a retirement fund for your spouse, and for the normal expenses of living – mortgage, utilities, food, car, gas, etc. Typically, that amount can be $500,000 or even $1,000,000 (it’s not cheap living in New Jersey).

How does a life insurance trust enter into the picture? A life insurance trust provides a means of avoiding estate tax. Although you may be aware that the federal estate tax kicks in above estates of $3,500,000 (if you die in 2009), New Jersey has a state estate tax that starts with estates of more than $675,000. If you have some equity in your house, a retirement account, and a bank account, you might be over the $675,000 threshold. In that case, you would be a good candidate for some tax planning. Let’s say you bought a $500,000 life insurance policy and made your estate the beneficiary of your policy. Now, the $500,000 is considered part of your estate for estate tax purposes. If you own a house with $200,000 in equity, have $50,000 in your retirement account, and $10,000 in the bank and add in the proceeds of the life insurance policy of $500,000, you will die with an estate of $760,000. Your federal estate tax is $0 but your NJ estate tax is just under $21,000. Do you want to give away almost $21,000 to the state? If you die 5 years from now, it is more likely that your estate will be larger (hopefully you saved more money and the real estate market went back up a bit). Then you will owe more estate tax.

If you put the life insurance policy in a trust, and you don’t own it anymore, then your estate is worth only $260,000. Your federal estate tax is $0 and your NJ estate tax is $0. That’s why you might need a life insurance trust.

You should talk to an estate planning lawyer to learn about whether you owe any federal or New Jersey estate tax. Would you spend $3,000 to save $21,000?

Listen to Your Mama When She Tells You about Her Medications

Estate planning is about so much more than documents. It’s about making your family’s end of life issues less difficult for you and for them.

If you have elderly parents, chances are they are taking at least one daily medication. My father had perhaps a dozen medications. He had one of those weekly pill boxes for the morning and a separate one for the evening. Every Sunday, my sister or I would go over to his apartment and fill the pillboxes for the following week. We also had a box to store all the original pharmacy pill boxes with a sheet of paper listing each drug, how many times per day it was taken, and the dosage. We took that paper with us every time we went to a new doctor or to the hospital.

Do you know what medications each of your parents are on? Have they tried to tell you and you’ve told them that you don’t need to know yet? Do you know whether they are taking the medications that have been prescribed?

It’s very hard to switch from being your parents’ child to their caregiver. You feel like it’s not your place to tell your parents what they should be doing. Yet, you know that you would feel guilty if they had been trying to get you to help them and you couldn’t deal with the change in roles so you ignored their problems. If your parents are trying to tell you about their medications, where their wills are located, whether they want a “Do Not Resuscitate” order on their medical chart under certain circumstances, you must listen and keep that information written down for when it is needed. Doctors rely on their patients telling them what medications they are taking so they do not prescribe additional medications that duplicate what they are already taking or have bad consequences when they are taken with certain other medications. If your parents can’t tell their doctor every medication that every doctor has prescribed, then you must step in and make it your business to get the doctors that information. Or you can keep your head in the sand and wait for a crisis to happen to the ones you love.

Why YOU Need to Get Organized

Autumn starts tomorrow and the weather will be getting colder and wetter. In New Jersey, we can get hit by huge storms that knock out power lines and that flood houses. If your house were hit by a disaster, would your important documents get soaked? Do you have an inventory of your assets? Do you remember where you put your will, your durable power of attorney, and your advanced health care directive?

Most of us say we'll get around to it when we have more time. But the reality is that we never have more time. And most of us are not good at organizing. It's a skill set that we never developed because it was never that important to us.

But not being organized costs you money in the long run. You wind up duplicating what you have because you can't find the originals. You can't provide to the insurance company a detailed list of your assets and their value so the insurance company doesn't reimburse you properly.

I would be happy to send a copy of my form of Document and Asset Locator to anyone who asks. It's free and you only have to call my office at 201-251-8001 or send me an email at RGronsky@Gronskylaw.com and I will send it right out. This weekend, take a half-hour with the whole family and make it a game to videotape all of your belongings. The next week, have a scavenger hunt and give a reward to the child who can find your will, your durable power of attorney, and your advanced health care directive. If you don't have these documents drafted and signed yet, call your estate planning lawyer immediately for an appointment. Don't stop to think about when you have time to schedule these things. Just make the appointment. You'll force yourself to juggle everything around the appointment and that's a good thing. As the Girl Scouts say, "Be prepared."

Do Your Loved Ones Have Your Passwords?

I’ll bet you never even thought to ask that question. I have a lot of my life on my computer right now – financial statements, bank statements, online bills, photos, email boxes (several of those), and membership on social networking sites. For each of these different places, I need a separate user name and password. On some of these sites, I need to keep changing my password for security purposes.

If I got hit by a bus tomorrow, would my family know how to access my computer life? Yes, for the most part. I have a list (that I need to check to make sure that it’s up-to-date) of what my user names and passwords are. If you got hit by a bus tomorrow, would your family know how to get to your online accounts?

Are you aware that Facebook, Twitter, and Yahoo and other sites that create accounts for you will make it very difficult for your loved ones to access your account after you die if they do not have your user name and password? One family had to go to court to get Yahoo to release the emails in their son’s mailbox.

The more we use cyberspace to store information, conduct our financial lives, and interact with our friends, the more we need to make sure that our family can gain access to that information in the event of our untimely death. Don’t make your family have to go to court to get something to which you can easily gain access. When you create your list of persons to contact when you die, add in the information for your online accounts. Save your loved ones that headache.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.Gronskylaw.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at RGronsky@Gronskylaw.com. Thank you!