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Protecting & Preserving Your Legacy

McClure Golenzer PLC Jan. 20, 2023

Why Estate Planning Is Important

You must have in place the documents and plans that will allow your trusted persons to take care of you when you cannot take care of yourself. If you have a stroke, who will take care of you, make sure you eat right, pay your bills, and deposit your checks? Even with today’s electronics, life does not work on auto-pilot. And, there are thousands of charlatans out there ready to take advantage of disabled people. 

This usually works okay where someone is survived by a loving spouse. But, the spouse may become disabled before you or is deceased. With the rate of marriage dropping and divorce widespread, many will not have a faithful partner standing by to move into full-time care. 

Even with a full-time caring person, the stress and demands on the survivor may become overwhelming where the proper legal documents are not in place and there has been inadequate planning for this phase of life. 

In the past, people could rely upon the faithful daughter. But, with the dropping birth rate, families spread across continents and the growing leadership and responsibilities of women in the workplace, fewer people will be able to just rely just on the faithful daughter. 

With all banking and commerce moving to cell phones and the constant threat of being hacked, banks, brokerage houses, suppliers, doctors, and nurses are increasing their security requirements. Your short-form power of attorney downloaded from the web is not likely to be accepted in today’s high-tech jungle. 

Estate Planning for People With Disabilities 

The most powerful tool for taking care of a disabled person is a detailed and comprehensive living trust which has the trusted person already as a co-trustee and where all important assets are owned by the living trust. Banks and other financial institutions are more likely to accept a comprehensive living trust than powers of attorney. 

Powers of attorney are powerful instruments if used correctly. To be certain your bank or other institution will accept the power of attorney, get the bank or institution to accept the power up front. Also, consider naming your trusted person as a co-signer on the bank and other accounts. Give a third person access to the account to make sure your trusted advisor is not taking advantage of you.  

For a single person without children, planning for your caretaking in the event of your disability becomes the most important and challenging part of your estate plan. Work with seasoned advisors who have seen what works to protect single persons and what does not.  

Paying for Nursing Care 

Nursing care can easily be $60,000 to $90,000 a year. Some purchase long-term care insurance to fund these costs. Many do not have the spare funds to pay the premiums for such policies.  

Part of your plan should be how you will be able to pay for nursing home costs as you age. If you will have the funds for such costs, that is great. These funds need to be protected and set aside for your care in the right legal framework. 

If you operate a business, explore the use of tax-deductible plans to fund such costs. 

Qualifying for Medicaid 

If you will be unable to afford such nursing home costs, there are several ways we can help you plan so that when the time comes, you will qualify for Medicaid. Medicaid will only pay for nursing home costs for those people with few “countable” assets. The wrong kind of assets (countable)  will disqualify them from being eligible for Medicaid. Note that in Virginia, if you are single and have more than $2,000 in countable assets, you will not immediately qualify for Medicaid.  

Family Feuds Over Inheritance 

The worst nightmare of many parents is the prospect of their children fighting over their inheritance. Fighting over inheritances has occurred for thousands of years and is the main source of conflict in many nineteenth-century English novels.  

Here are some quotes: 

  • “What you leave at your death, let it be without controversy, else the lawyers will be your heirs.” Francis Osborne. 

  • “The meek shall inherit the earth, but not the mineral rights.” J. Paul Getty, quoted in Robert Lenzner’s, The Great Getty

  • “He who comes for the inheritance is often made to pay for the funeral.” Yiddish proverb. 

  • “There is nothing earthly that lasts so well, on the whole, as money. A man’s learning dies with him; even his virtues fade out of remembrance; but the dividends on the stocks he bequeaths to his children live and keep his memory green.” Oliver Wendell Holmes, Sr., The Professor at the Breakfast Table (1860). 

  • “When it comes to divide an estate, the politest men quarrel.” Ralph Waldo Emerson,  Journals (1863). 

  • “We pay for the mistakes of our ancestors, and it seems only fair that they should leave us the money to pay with.”  Don Marquis. 

  • “Say not you know another entirely till you have divided an inheritance with him.” Johann Kaspar. 

  • “I will leave my children enough money so that they would feel they could do anything, but not so much that they could do nothing.”  Warren Buffett. 

  • “You never really know someone until you share an inheritance with them.” Mark Twain. 

How to Prevent Estate Disputes 

To prevent fights, set up a living trust that clearly spells out what each child will receive. The parent transfers all non-retirement assets to their living trusts.  If a child does not like what share they received, they will have to hire a lawyer, pay a substantial upfront retainer, and go to court on a case they are likely to lose. The lawyers with the best reputations will advise them that they are likely to lose in a challenge to a properly executed and funded living trust. The shyster lawyer will ask for a big retainer, and promise great results, knowing that their client is unlikely to win but will only succeed in lining the pockets of the lawyer with expensive fees.

Contrast this with a Will -based plan. In Virginia, DC, and Maryland, when the probate is filed, the executor will have to notify all heirs of the filing of the estate and the funds in the estate. This provides a disgruntled heir an opportunity to complain to the court without having to hire a lawyer or pay to start a new lawsuit. Such complaints can greatly impede an estate administration. If there is a fully funded living trust, there usually is no duty to send a notice to the disgruntled disinherited heirs about the death or the estate or their inheritance.  

Family Businesses & Estate Planning 

A key part of planning where there is a Family Business is clearly spelling out who will take over leadership of the business and who will own it when the parents are out of the business. In many families, there are children who work in the business and those who do not want to work in the business. Usually, the parents think the fair thing to do is to leave an equal share in a business to each child, whether they work in the business or not. 

Families who beat the overwhelming odds against a family business surviving beyond one generation know that business survival means keeping personal and business expenses low and retaining lots of cash on hand for the inevitable downturn in the business cycle. However, if a child who does not work in a small business inherits a business interest worth $1 million (for example), that child wants some cash flow on their million dollars or will want to cash out and sell out to a stranger.  The better approach is to have only the children who work in the business inherit shares in the business. The children who do not work in the business can inherit other assets such as the residence of the parents or retirement accounts to even out an equal inheritance by all children. This will avoid an otherwise unavoidable fight among the heirs.  

One of the advantages of working with McClure Golenzer is that we prepare and implement both your estate and business plans. Most estate planning attorneys are not well-versed in business planning. One attorney often does the estate plan, and another does the business plan. The estate plan may contradict the business plan, setting a slow fuse on a timebomb that will explode in a future devastating big family feud. Instead, at McClure Golenzer, we coordinate and integrate your estate and your business plans so that everything goes smoothly, and the legacy of your family business survives for another generation.