How to Buy Life Insurance Like a Pro

Life insurance is a purchase only made once or twice in a lifetime, so it is common to be unaware of the ins and outs of policy protection. The potential pitfalls are significant, however, so review the following tips before purchasing a life insurance policy.

Get the Right Type and Amounts

Life insurance policies are generally sold by highly commissioned sales people or by order takers. In either case, you need to be sure you are in the know, before you buy, lest you get sold a policy or amount you don’t need, or you overlook the types and amounts that are right for you. We can help you make objective decisions about your insurance needs, with no commissions payable to us, so you know you’re getting our 100% on your side analysis.

Don’t Name a Minor as a Beneficiary

If you’ve named a minor child as a beneficiary, or even a secondary beneficiary, after your spouse, you could be creating double trouble. First, your life insurance would have to go through a court process and subject to the control of a financial guardian, and then second, whatever is left would be distributed to your minor child when he or she turns 18.

You can easily avoid this by naming a trust as beneficiary of your life insurance, thereby keeping your life insurance out of court and ensuring your child doesn’t receive control until he or she is ready. Plus, then you get to decide who takes care of the life insurance money you are leaving behind, until it’s distributed to your child. And, you can even build in protection against your child’s future divorce, or any creditor issues.

Term Insurance to Fund Divorce Settlements

If you receive child support and alimony, insist that your spouse have a  term life insurance policy to guarantee you are able to collect on your settlement, even if your ex-spouse dies while still paying out your divorce settlement.

Compare Quotes for Whole and Term

Experts suggest most people only need life insurance to cover their working years and while they raise a family. Term life insurance is typically affordable and covers you when you need it most. Permanent insurance is best when you know you will have estate taxes to cover OR if you want to use insurance as an investment vehicle with guaranteed returns, but often big commissions to make up in the early years of the policy. One of the services we provide to our member clients is to review all insurance policies, both in place and those being considered, to provide objective evaluation before you buy.

Don’t Overlook Living Benefits

A living benefits rider could allow you to access funds if you were diagnosed as terminally ill or with a chronic and debilitating condition.

If you are ready to purchase a life insurance policy that works for you, start by sitting down with an  Estate Attorney. As your Estate Attorney, we can walk you step by step through creating a financial plan that will help you provide for your family no matter what. At GP Schoemakers, PLLC, we offer Family Wealth & Legacy Planning Sessions that help you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth & Legacy Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and what your wishes are when you die.

This article is a service of Gratia P. Schoemakers, Estate and Business Attorney. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth & Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 832.408.0505 to schedule a Family Wealth Planning Session and find out how to better protect your family.

Tax Lessons to be Learned from Celebrity Estate Plans

A celebrity’s image and likeness can continue to produce considerable income after death. This type of intellectual property is considered part of your estate, and the IRS can tax its value. In the case of pop star Michael Jackson’s estate, that recently meant an IRS bill to the tune of $64.5 million, years after his death, which is about 40% of his likeness’ valuation of $161 million.

Michael Jackson’s estate planning fail could certainly have been avoided by using one of these estate-planning strategies that minimize the taxable value of a person’s image and likeness.

Charitable Bequests

Robin Williams made a charitable bequest of his image and likeness to a foundation. It was set up in his name, allowing his estate to get a charitable deduction against the estate tax.

Time Bans

Williams also established a 25-year time ban to prevent any future exploitation of his image. A time restriction lowers the value of a celebrity’s name and likeness because the value is typically lower at the end of the ban than at the date of death.

State of Residence

Some states don’t recognize inheritable postmortem rights to likeness. This means the estate can’t profit from it. Consider your state’s laws when estate planning so you can benefit from any available tax breaks.

Consult with Multiple Appraisers

Get one appraisal and have another appraiser act as a consultant to point out where there might be room to argue against the valuation.

Celebrity estate planning fails grace the cover of tabloids and news sites as soon as weeks after their deaths. Fortunately, they provide valuable estate planning lessons for the rest of us. While their fails may be more expensive, even a small fail can have a huge impact on your family’s future and well-being. Don’t leave your family holding the bag, especially an empty one.

Your family is worth the time for you to have a Family Wealth Planning Session with us so you can make empowered, informed choices for the people you love. As your Estate Attorney, we can walk you step by step through a process that will minimize your tax liability and keep your family out of court and out of conflict.

Our Family Wealth & Legacy Planning Session guides you to protect and preserve what matters most. Before the session, we’ll send you a Family Wealth & Legacy Inventory and Assessment to complete that will get you thinking about what you own, what’s most important to you, and what you can do to ensure your family is taken care of and you’ll leave the Session with absolute clarity about how to make the best choices for your life and death.

This article is a service of Gratia P. Schoemakers, Estate and Business Attorney. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth & Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 832.408.0505 to schedule a Family Wealth Planning Session and find out how to better protect your family.

Leaving Without a Plan: Prince Didn’t Leave a Will & Here’s Why You Should

Even after death, celebrities are highly publicized for their mistakes, many of which we make ourselves. April 21, 2016, superstar musician Prince suddenly died, leaving no will, and the management of his substantial estate fraught with legal complications and added costs.

It’s easy to assume that the wealthiest among us have all their ducks in a row, but it’s hard to judge someone—even a celebrity—for neglecting something like the creation of a will. Until you stop to seriously think about what will happen when you die, creating a will can seem like an unnecessary and morbid task, certainly not something you casually check off your to-do list. Nevertheless, the importance of having a will simply cannot be stressed enough. Below are just a few of the reasons why everyone should have a will, no matter their wealth, age or health.

You can name the person you want to manage your estate in your will. You will get to choose someone you trust and make sure they have all the knowledge they need to ensure your wishes for your estate are carried out.

You can decide who your beneficiaries will be. You can also disinherit those who would normally stand to inherit from your estate if you choose. Your wealth and possessions are yours; a will provides a legally enforceable way to ensure they go to the right people.

You can ensure your minor children will be raised by the people you want, for the long-term. If you have minor children, you should name a legal guardian and include provisions for their care in your will. But, don’t rely on a will alone because it won’t address the immediate care of your children if something happens to you, it won’t provide for your children’s care in the event of incapacity and it won’t ensure someone you would never want to raise your kids could not.

You can leave gifts and donations to your favorite charities or people you love beyond your legal family. Without a will, your estate would pass to the people designated to receive it under the law, and that may not be who you would want to receive everything you own. Creating a will ensures you get to choose who gets what.

Important as they are, a will can only do so much. For example, a will does not keep your family out of court.

And, a will does not ensure your kids will never be taken out of your home, if something happens to you.

And, a will does not keep your family out of conflict.

A will is only one part of a comprehensive estate plan that will protect and enforce your wishes when you die.

If you are ready to take the right steps toward making informed, empowered and educated decisions for the legal and financial future of the people you love, start by sitting down with a Personal Family Lawyer®.

As your Personal Family Lawyer®, we will walk you step-by-step through the creation of an estate plan that will protect what you value most. Our Family Wealth Planning Session™ helps you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you and what you want to leave behind.

This article is a service of Gratia P. Schoemakers, esq. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Begin by calling our office today to schedule a Family Wealth Planning Session.

 

Avoid these 10 Common Estate Planning Mistakes

As a Personal Family Lawyer®, I see many of the same estate planning mistakes made time and again by people who either fail to plan properly or who use “do-it-yourself” estate planning websites or forms in an effort to save money.

Without professional guidance, this can cause more problems for your heirs and end up depleting estate assets by far more than what you could potentially “save” by doing it yourself online.

A qualified estate planning attorney or Personal Family Lawyer® can help you avoid these 10 common estate planning mistakes:

  1. Failure to leave any written documentation of your assets, including a list of your online accounts and passwords
  1. Failure to let family members know where to find important estate planning documents
  1. Failure to name a guardian for minor children or choosing a guardian who lives far away without planning for temporary, local guardianship (solved with a comprehensive Kids Protection Plan®)
  1. Failure to name recipients for your personal possessions
  1. Failure to designate beneficiaries for retirement and other financial accounts
  1. Failure to name secondary beneficiaries
  1. Failure to name alternative trustees or executors
  1. Failure to properly fund or title assets to any trusts you have established
  1. Failure to update your estate plan as life circumstances change
  1. Failure to create an estate plan of any kind and instead leaving it to the court system to decide how your assets will be distributed

If you’d like to learn more about how to avoid common estate planning mistakes that could cost your heirs dearly, call our office today to schedule a time for us to sit down and talk.

Spring Cleaning For Your Legal and Financial Affairs

Spring has officially sprung and that means it’s spring cleaning time. Shake out the rugs, clean out the cupboards, and get your legal and financial affairs in order.

For plenty of folks, it’s easy to know what to do when it comes to home organization, but the idea of legal and financial ordering can be complex and confusing.

This article will give you a few places to start:

  1. Review Your Beneficiary Designations

Request updated beneficiary designation forms from your life insurance account and retirement account custodians. Look at the form and identify whether you have a minor designated as either a primary or contingent beneficiary. If you do, those assets will be tied up in Court, unnecessarily, and may not be available to the people you’ve named to care for your children.

Consider designating your life insurance and retirement accounts to be distributed to a trust for the benefit of your heirs, providing Court and creditor protection, and ensuring your children do not inherit money before they are properly prepared.

  1. Update Your Family Wealth Inventory

Your Family Wealth Inventory is where we document the assets that you own, so that in the event you become incapacitated or when you die, your family will know how to find what you own.

Without an updated Family Wealth Inventory, your assets could be lost to the state department of unclaimed property. There’s currently FOUR (4) billions of dollars of assets in our state department of unclaimed property because most people do not leave a clear record of their assets at the time of their incapacity or death.

  1. Consider If You Need to Name New Guardians (Long or Short-Term)

Review your guardian nomination designations. Have you named guardians for both the short-term (local) and the long-term (people you would trust to raise your kids fully)? If so, do they need to change? Is there anyone you would wish to exclude? Does the ID card for your wallet need to be updated? This is the time to check.

  1. Check Out the Title to Your House

Get a copy of the deed to your house and make sure that your trust is listed as the owner on the deed, if you want your house to stay out of court in the event of your incapacity or death. If you see your personal name on the deed, and there is not a trust listed, you can be sure that would result in your house having to go through the court process of probate in the event of your death. If you don’t want that, now is the perfect time to spruce up your planning.

  1. Come In and Meet With Us For a Family Wealth Planning Session

Last, but far from least, this is the perfect time of  year to come in and meet with us for a Family Wealth Planning Session, whether you’ve done planning in the past or not.  We will have a 2-hour working meeting that will get you more financially organized than you’ve likely ever been before (unless you’ve already done planning with us) and give you the confidence of knowing you’ve made the most empowered, informed and educated legal and financial decisions for the people you love.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer®. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call our office to schedule a time for a private conversation about your family wealth via a Family Wealth Planning Session, where we can identify the best ways for you to ensure your legacy of love and financial security for your family.

Are You Leaving Your Retirement Account at Risk Due to Poor Planning?

You’ve spent your entire life building up your retirement account. It may even be the biggest asset you’ll leave behind for the people you love.

If that’s the case, you may want to consider creating a special trust designed specifically to receive your retirement account assets in the event of your death.

If you leave your retirement account to the people you love outright, simply by naming them as beneficiaries on your retirement account rather than through a special trust, here are the risks:

  1. Some studies indicate 80% of retirement account beneficiaries immediately liquidate the account and frivolously spend the assets (and on top of using the assets in ways you may not agree with, they also lose significant tax benefits for these assets you worked so hard to create);
  2. If your beneficiary is married and does not properly handle the retirement assets you leave behind, and then gets divorced, your hard-earned assets could end up in the hands of the future ex-spouse of your beneficiary;
  3. If you are in a second marriage situation with children from a prior marriage, you may be setting your spouse and children up for conflict after you are gone, due to the way you have planned (or not planned) for the passage of your retirement account.
  4. If your beneficiary is ever in a situation where he or she has creditors or may have to file bankruptcy, and you’ve left your retirement account to him or her without a special trust, your retirement account would go to satisfy those creditors first.

Here’s the good news, it’s not hard to protect your retirement account for your beneficiaries with the right planning. We use a variety of special trusts to ensure the retirement assets you’ve worked so hard to build up throughout your life are passed on to the people you love so they are totally protected from a future divorce, creditors, bankruptcy and so that they do not create conflict for your loved ones.

If you have a significant retirement account whose designated beneficiary  is your spouse or children, or even your regular revocable living trust, call us to have your planning reviewed immediately.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer,®  who develops trusting relationships with families for life.  If you’re ready to begin planning what you’d like to happen in case of unfortunate emergency, or even your death, schedule a Family Wealth Planning Session™ today. We can help you make plans for how you want to provide for your loved ones when you can’t be there. Contact us today to schedule an appointment to discuss your future and we’ll identify together how to best prepare for you and your family.

Consider Your Estate Plan Before Your Summer Travel

It’s summer, when travel is the busiest and careful planning is necessary to nab the best airfare or book that awesome beach cottage before it slips away. One thing that is probably not on your travel to-do list is estate planning, but it should be so you can travel with peace of mind.

Here are some tips to pack away your worries before you board that flight:

Complete your estate plan. If you’ve been putting it off, now is the time to complete your estate plan. If money is a consideration, then start with those the most important items: a will, power of attorney and advance health care directives.

Update an existing estate plan. Has something changed in your life since you last updated your estate plan? A birth, a death, a marriage, a divorce? Each of these triggers your need to update your estate plan.

Establish guardianship for minor children with a comprehensive Kids Protection Plan(r). Before you travel, make sure you have a plan in place to ensure the well-being and care of your kids, no matter what. A plan that only names guardians in a Will could leave your kids at risk of being taken into the care of strangers while the authorities figure out what to do, if something happens to you.

Review beneficiaries. Beneficiaries of your retirement accounts, life insurance and other assets must be kept current or your assets will not pass to them upon your death. If you have minor children, you will need to set up a trust and name the trust as beneficiary so your assets can pass without court intervention.

Review/update incapacity documents. Two very important health care documents – a durable power of attorney for health care and a HIPAA Authorization – will determine who can make medical decisions for you and who has access to your medical records in case of incapacity. Be sure you have these documents before you travel and that the person/people named are still valid.

Review/update insurance. Does your life insurance coverage still meet your family’s needs?  If not, it is time to update your insurance policy before you hit the road.

In addition, you need to be sure you have an organized file of all your accounts and estate planning documents and you need to tell your family where they can locate the file if and when it becomes necessary.

The time to create a plan that spells out how you will pass on your values, beliefs and your money to your children is now. You can begin by calling our office today to schedule a time for us to sit down and talk.

Protecting Your Child with a Special Needs Trust

When you have a family member with special needs, it is important to understand that your estate planning strategy is unique and requires the assistance of an attorney experienced in creating Special Needs Trusts. If an inheritance is left directly to your family member with special needs, it could result in the loss of essential government benefits that assist with the cost of his or her care.

A Special Needs Trust permits an individual that is 65 years or younger to receive certain resources beyond what is supplied by Medicaid without making him or her ineligible to receive the government benefits.

A Special Needs Trust can be created while you are living or, you can create a will or a revocable living trust that establishes a Special Needs Trust at your death and transfers funds into the trust when you die.

Either way, a Special Needs Trust can provide a disabled dependent with the ability to pay for the care and services that are not covered by government benefits. This includes things such as therapies, special equipment, education, travel costs associated with medical appointments, and other similar costs that are not covered by Medicaid.

When the government determines whether or not your loved one qualifies for benefits, the assets held in a Special Needs Trust are not considered because the funds held in the trust are not readily available to the beneficiary. The distributions from a Special Needs Trust are made on a discretionary basis.

A Special Needs Trust could also be used to create financial incentives to ensure your loved one continues to be cared for the way you want, after you are gone. For example, we’ve built provisions into Special Needs Trusts that provide for cash payments to a guardian who takes the family member with special needs out of the house to movies and meals, for example, in the same way the parents did while they were living.

Finally, it is also important to consider how to ensure that the trust has sufficient funds throughout the life of the individual with special needs. One method that is commonly used is to name the Special Needs Trust as the beneficiary of the parent’s (or other relatives) life insurance policies. You will also want to ensure that the trust assets are wisely invested so the funds continue to accumulate and grow. Family members and friends should also be encouraged to make donations or gifts to the trust and/or to include it as a beneficiary in their will or life insurance policy.

It can be confusing to properly plan for a loved one with special needs, but it is imperative that you get started as soon as possible. Let us help. One of the main goals of our law practice is to help families like yours plan for the protection of yourself and your family through thoughtful estate planning.  Call our office today to schedule a time for us to sit down and talk through a Family Wealth Planning Session, where we can identify the best strategies for you and your family.

 

Think About Your Beneficiary Designations Over the Holidays

When you look around your holiday table this year, you will probably not be thinking about the beneficiary designations on your 401(k), IRAs or life insurance policies.  But perhaps you should.

Having the wrong beneficiary designated on these and other things like bank accounts, annuities and 529 college savings plans is probably one of the biggest estate planning goofs people make.  This is because most of us name those beneficiaries when we initiate a plan or open an account and then forget about them.

However, life changes and this is why you need to review and update your beneficiary designations at least once a year.  For example, here are six scenarios that could cause a change in beneficiary designation:

  • You got married, divorced or remarried
  • You changed jobs and moved your retirement account
  • One of your beneficiaries died
  • The birth of a child or grandchild
  • You moved your account to another financial institution
  • One of your beneficiaries became disabled

Not having the correct beneficiary designated (or designating a minor) can wreak havoc on your family when something happens to you as well as create tax issues for your heirs.  You could unintentionally disinherit the very people you care the most about and potentially tie up your estate in probate or, worse, litigation.

Enjoy your holiday with family, and after the holidays are over, make it a point to review your beneficiary designations and update, if necessary.

If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make 2014 the year you get this done.  You can begin by calling our office today to schedule a time for us to sit down and talk because this planning is so important.

 

7 Reasons to Consider a Trust for Your Family

Do you consider trusts to be instruments of the wealthy?  While it is true that many Americans of means have trusts to protect and pass their wealth, there are some reasons why trusts can also be useful for middle-class families.  Here are 7 of them:

  1. Control distribution of assets.

You would not hand over your car keys to a child who has had no proper preparation for driving, and chances are you would not want to hand over all your assets to a teenager either.  However, if both parents die at the same time, the children would inherit all the assets upon their 18th birthdays.  A trust allows you to specify how and when you want your children to inherit.

  1. Protect assets from creditors.

Placing an inheritance in a trust ensures that those assets are protected from your heir’s  — or their spouse’s – creditors. Consider a Lifetime Asset Protection or Wealth Creation Trust.

  1. Protect inheritance from spendthrift heirs.

Not everyone is good with money.  If your heirs fall into that category, you can use a trust to ensure the assets are not frittered away due to spend-thrift behavior.

  1. Protect inheritance for children of prior marriage.

You can use a trust to both provide for your current spouse and any children from a previous marriage.

  1. Provide for a special-needs heir.

Leaving assets outright to an heir with special needs could disqualify them from receiving important government benefits.  Leaving those assets in trust bypasses this potential risk.

  1. Avoid probate.

Assets can pass to heirs without going through probate by using a trust, saving beneficiaries the time and expense of the probate process. Probate is an expensive, public and unnecessary court process you can keep your family from having to deal with.

  1. Protect privacy.

Once a will is entered into probate, it becomes public; a trust is a private document that will protect your family’s privacy.

If you would like more information about protecting your loved ones, call our office today to schedule a time for us to sit down and talk.