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Trusts & Inheritance

on August 18, 2015

We shout at referees.  We keep scores and tallies.  We lobby both our parents and the legislature in varying and sometimes equal measures.  From fluorescently lit fields to classrooms infused with chalk dust, we all have a vested interest in fairness.  It is the backbone of any long-lived civilization, and the hotly contested topic of any thriving modern society.

grandpa daughter walkingWhen it comes to questions about inheritance, many parents will answer with two words: “Divide equally.”  And while these words might seem to embody fairness in a distribution of inheritance, the reality is that it may leave far more questions than it does answers – and when it comes to an estate plan, questions lead to time spent in court.

What does it mean to divide equally?  This is a simple question with a deceptively complex answer.  While it seems simple enough to say “three children, each get a third,” doing so without thinking about the consequences, can lead to problems down the line.  What if, in a case where your kids have equal shares in the family home, one of them decides to sell off his portion?  What if a majority of them decide to evict the one child living there?  What happens to personal property which cannot be divided, such as cars or jewelry?  In the latter case, the trustee of the trust will have the power to distribute personal items according to a roughly equal value, but wouldn’t it be better if instructions were left to guide the trustee?  Wouldn’t it be better if instructions were left regarding what to do with your home?

This is not to say that every estate plan has to be divided “equally,” or “fairly.”  In fact, many times it’s better that it isn’t.  Some kids will not need the money and possessions – in some more uncommon scenarios, they won’t even want it.  Sometimes one child will need more help than another, whether because of financial straits, a disability or because of some unforeseen event.  “Fairness” can take on an entire new meaning when, between two children, one gets into an accident and is left paralyzed from the waist down.  In fact, at a certain point, “fairness” can become an entirely inappropriate standard for guiding our actions.

Implicit parental obligations aside, it is important to keep in mind that the inheritance is a gift.  It is a gratuity, something which should neither be expected nor fought over.  Of all the things to emphasize in an open discussion with one’s children, this is likely the most important.  Your money is yours – not your children’s, and not your relatives’.  Any inheritance they receive is not given in order to fulfill a parental duty, or even out of fairness, but out of the love and care we naturally give to those whom we care about.

The primary purpose of an estate plan is harmonious relations.  Trusts serve a vital role in safeguarding relationships between family members by preventing disputes over inheritance; the more specific trust instructions are, the fewer questions are left for one’s beneficiaries.

Start a conversation.  Discuss your plans and wishes with your children, and let them be a part of the process so that, when the time comes, there will be nothing left to worry about.

If you have any questions, our office is available at (808) 942-8778.

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Your Medical Proxy | Advance Health-Care Directives

on August 11, 2015

We’ve gone over some difficult questions which always come up when planning an estate, one in particular of the type hopefully covered by your up-to-date Advance Health-Care Directive (otherwise known as a “Medical Power of Attorney,” otherwise “Living Will”). Not having the aforementioned document can lead to heightened stress for family members, and in some extreme cases legal battles stretching for months or years, conservatorship hawaiiadding to the already extreme financial burden life support places on many families around the country.  Many of us still remember the frenzied debate over the right to die triggered by Terry Schiavo back in the early 2000s, as well as the more recent discussion triggered by Brittany Maynard’s decision to end her own life. Putting your wishes down in writing can potentially save your family tens of thousands of dollars in unnecessary medical examinations, legal counseling, and litigation fees.

One of the ways in which a health care directive is effective is in designating a Health-Care Agent–someone who, in the case where you are rendered incapacitated, can perform administrative tasks necessary to your care according to your written instructions.  This includes forwarding your medical information to health care providers, signing medical documents on your behalf, and choosing what facilities to attend. When it comes down to the tough decisions, such as when to move into hospice or hospital care, when/whether to insert a feeding tube, and when to have doctors stay the inevitable, your Health-Care Agent will be the one to make the determination. Accordingly, most people choose someone who knows them well, such as their spouse, partner or other family member.

While this may seem like a lot of free-wielding power to hand over to a person, regardless of how close he/she was to you, it is infinitely better than leaving such decisions up to a judge in open-to-public court, subject to fees and delays. The specificity conveyed in an Advance Health-Care Directive helps to ensure that your wishes are followed, lessening the stress and potential conflict that comes with leaving such decisions to the rest of your loved ones.

There are a number of different ways to record your wishes, but putting them down in an Advance Health-Care Directive is the best way to ensure that, in the case of unexpected tragedy, nothing will be left to chance.

Be sure to check out the American Bar Association’s “Myths and Facts About Health Care Advance Directives.”  More information about estate planning can also be found at our website here. Otherwise, feel free to call our office with any questions at (808) 942-8778.

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The Guardian and the Conservator

on April 24, 2015

As much as life may seem intent on slapping us sideways at times, it’s a fairly self-evident fact that we exercise a lot of control in our lives. People carry their businesses in their pockets, keep alarms and timers for tracking everything from when we need to wake up to when the turkey needs to come out of the oven. We can track our finances online, deposit checks from our phone. We are in constant, unceasing contact with one another, whether it be over the phone or through text or through social media. How terrifying it is then, when we are rendered unable to exercise control over any of this, in the microcosm each of our lives represents.

conservatorship hawaiiIn light of the tragic scenario where we are rendered unable to care for ourselves, whether it be due to age or to infirmity, the court can appoint a Guardian and a Conservator. Think of them as your Nurse and your Banker, respectively; the Guardian will assume responsibility for personal care and well-being of their charge, and the Conservator is appointed to take over management of one’s financial affairs. One person can also serve both roles, depending on what’s manageable and convenient for everyone. Both can be designated in either a will or a trust, and both are held accountable to the courts via annual reports.

Regardless of court oversight, however, these are positions of great power over individuals who are often helpless to care for themselves. There are cases where court-appointed conservators have abused this power: in San Diego, a professional conservator handed off half of a $1 million estate to her son, a financial advisor, to invest for the estate. While taking commissions from the investments, the son lost $100,000 of the $500,000 inappropriately entrusted to him by his mother. The court, overwhelmed by the pure volume of cases handed to it daily, let it slide. Contests over guardianship are also not uncommon – they are, in fact, all too frequent and altogether sombering tales of family infighting, abuse of power, and distress.

The lesson here is the importance of having people in our lives whom we can trust, not only to have in our lives, but to literally care for us when we’re no longer capable of caring for ourselves. Have a Trust and Advance Health-Care Directive written, and choose your potential caretakers well (for your financial affairs and for your personal well-being), lest your intentions for yourself and your estate be distorted and abused.

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Top 10 Common Estate Planning Mistakes

on January 21, 2015

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No matter the size of your estate, it’s important to think through every detail to prevent fighting among heirs and to help answer difficult questions about your trust after you’ve passed. Proper planning is the first step, along with avoiding these common mistakes.

1. Giving an adult child control of your bank account may seem like a good idea, but it may jeopardize your chance at qualifying for government benefits, and the child may keep the entire amount after you’ve passed, rather than distributing it.

2. Leaving your home equally to your children may be well-intended, but it can still lead to complications and disagreements among siblings that can be prevented.

3. Naming your eldest child as Trustee because of their age is not recommended. It should be based on who is best fit for the task.

4. Not having an Advance Health-Care Directive places the tough choice on your family, so it’s important to include your choices in end-of-life situations in your plan.

5. Not stating who determines if you are no longer able to control your affairs can cause disagreement among relatives.

6. Not telling children why you left them unequal shares may result in jealousy and resentment among them, so it’s important to include an explanation.

7. Assuming that personal items will be divided peacefully, with no clear instructions, can cause fighting, so be sure to be detailed in your plan to prevent these disagreements.8. Calculating your children’s inheritance without including past gifts in the equation may cause siblings to compare the lifetime financial assistance they’ve received from you and lead to jealousy among each other.

8. Calculating your children’s inheritance without including past gifts in the equation may cause siblings to compare the lifetime financial assistance they’ve received from you and lead to jealousy among each other.

9. Forgetting to move assets into your Trust may cause it to end up in court or with unintended people.

10. Not updating and reviewing your estate plan on a regular basis may leave your family with taxes, court proceedings or unintended beneficiaries.

Contact us for a complimentary estate plan assessment at 942-8778.

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Preserving Memories without Controversy

on October 16, 2014

Memories are a saving grace. They comprise our identities, remind us of who we are, and of those who are important to us in turn. They can be a great source of comfort in times of need. In the same way, our belongings, our shared items, and our homes are all expressions of who we are, of the decisions we have made in life; manifestations of our physical presence on earth. They are often imbued with memories of who we are, and where we came from. They form, in a sense, part of our legacy.

When a loved one passes away, there is an unfortunate, but necessary, amount of work to be done in administering the deceased’s belongings and assets: paying off creditors, transferring property and financial assets according to the decedent’s wishes, distributing personal items, notifying banks, businesses, and beneficiaries alike. Having to take care of these duties, while dealing with the emotions of the loss of a loved one, can be an overwhelming task.

For that purpose, we have Estate Administration Group; a team of advisers, who can handle the burdensome tasks following the death of a loved one, as well as guide successor trustees or personal representatives who come to inherit the responsibilities of wrapping up an estate. Should the estate need to go through probate, we can assist with the court proceedings, making sure all assets are distributed appropriately and keeping costs and time spent to a minimum; should the estate be in trust, we can advise the trustee(s) of their legal and fiduciary duties, making sure the process goes quickly and smoothly.

We mentioned in our first post the estate of Bernice Pauahi and Bishop Reed. What we didn’t mention is how, more than a century after Bernice Pauahi’s passing, her estate was plagued with controversy and scandal surrounding its administration.

Take steps to preserve your legacy, and your memories. If you are in need of assistance in administering an estate, or have any other questions regarding estate planning, feel free to give us a call at (808) 942-8778.

For more information on how we can assist you, please feel free to contact us and a representative will contact you within one business day.

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Probate: Agent of Relief, or Monster Under The Bed?

on August 19, 2014

We have touched on probate in our blog post What Happens To Us When We Die? and why it’s often better to avoid it. Some of us have also likely heard a horror story or two about the process. But why are there probate proceedings in the first place? And if one doesn’t mind making a couple trips to court and is on good terms with all the relatives, what is there to be afraid of, exactly?

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When a loved one passes away, most of those people closest to the person are not in the right place to make decisions about the deceased’s remaining assets.

When a loved one passes away, most of those people closest to the person are not in the right place to make decisions about the deceased’s remaining assets. In most cases, everyone has related to the deceased a little differently, in varying levels of personal investment. For this reason, it becomes necessary to give the power of judgment to an objective third party: someone who can look at what is left and make unbiased decisions under the law regarding what goes where, whether a will exists or not. As such, we have probate court.

While family members, relatives, and friends alike are expected to be accounted for when distributing an estate’s assets, it is unfortunately not uncommon for creditors and other financial institutions to also have a vested interest in the deceased’s estate, whether it be for debt, unpaid bills, or a lingering mortgage. A probate proceeding is public because it is supposed to address anyone and everyone who might have a claim to a deceased’s estate, including that secret lover and/or child no one else knew about (it happens–they’re not just a figment of Hollywood imagination).

A struggle over assets can occur which can divide families.

Any estate or elder law attorney will probably have a story or two to tell about issues of estate causing tension in relationships, even among the most amicable people. Whenever there is no will, or a will is unclear, a struggle over assets can occur which can divide families and cause long-lasting rifts between parties. With a trust, however, an estate can be distributed with more flexibility and specificity, ensuring that the only voice with ultimate authority on where your assets go can be heard for generations to come: your own.

Should you have any questions, require assistance in planning your estate, or are in need of a good attorney to get you through the probate process, give us a call at (808) 942-8778.

You can find more information on probate proceedings here.

For more information on how we can assist you, please feel free to contact us and a representative will contact you within one business day.

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What Happens To Us When We Die?

on August 19, 2014

Estate Planning Group is a locally owned law practice specializing the areas of Estate Planning, Probate Administration, Medicaid Planning, Asset Protection, and Conservatorship or Guardianship Proceedings.

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What happens to us when we die?

In the realms of religion and philosophy, the question has generated a recurring theme of discussion and debate. But while matters of the soul and spirit certainly take priority in many of these dialogues, what is unfortunately all too often overlooked is what could also happen to our material possessions when the time eventually comes. Embedded in our belongings are often precious memories, items of heritage, and within monetary assets, a tool for securing a family’s financial future. If King Tut has taught us anything it’s that, unfortunately, we cannot take our treasures with us to the other side; it is up to us to ensure that they go to the right people, at the right times, while avoiding any metaphorical and sometimes all too literal grave robbers.

So we write a will, big deal right?

Not necessarily. What many people don’t know is that wills don’t automatically grant powers of distribution or the right to property on their own. They first need to go through probate: a court proceeding which requires the presence of any interested persons in court, possibly on multiple occasions, to receive decisions made by a judge on how any assets left behind by the deceased person are to be distributed. Probate proceedings take time, money, and are visible to the general public. Plus, assets are often frozen during the proceeding; a family in need of the remaining monetary funds to pay for living expenses can be denied access to them for weeks and months.

The best way to avoid all of the above is through a revocable living trust…..

The best way to avoid all of the above is through a revocable living trust, or RLT. RLTs are exempt from probate – they are legal entities, recognized by banks, insurance companies and all other manner of financial institutions, which contain all of your instructions, and can be changed to suit your needs at any time in the course of one’s lifetime. Two fairly high profile (albeit an unusually large and complicated) examples of trusts are the Kamehameha Schools, as established by Bernice Pauahi Bishop in 1883, and the Charles Reed Bishop Trust. The trustees of both trusts continue to carry out the instructions left behind by Bernice and Charles Bishop in preserving Hawaiian history and culture, and the legacy of the Hawaiian people. While we don’t all have assets and belongings to the same degree as Bernice Pauahi Bishop and her husband, each of us does have the ability to consolidate what we own and leave specific instructions for each portion of our financial assets, our property, and our personal belongings. At Estate Planning Group, we are dedicated to protecting our clients’ futures in the face of the inevitable through the use of revocable living trusts and other estate planning tools.

For more information on how we can assist you, please feel free to contact us and a representative will contact you within one business day.

You can find more information on probate proceedings here.

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Asking The Tough Questions In Estate Planning

on August 18, 2014

For us here at Estate Planning Group, tough questions are a part of daily life in the office.

Anyone who has lived past the age of four has likely come into that scenario where questions needed to be asked; questions of the type where the answer could have life-altering, earth-shattering consequences. For many of us, a fairly commonplace example is “Will you marry me?” For some five-year olds, it’s “How was I made?” And for others, it’s “Did I remember to bring in the laundry before it started raining cats and dogs outside?” For us here at Estate Planning Group, tough questions are a part of daily life in the office, where we counsel clients on some of the most difficult decisions people can encounter in their lives: What happens to all of my possessions when I pass away, who should decide whether or not to pull the plug if I’m reduced to a vegetative state, and who will take care of my dog when I’m no longer there for him/her?

Cover all your bases, and make sure that nothing is left to chance.

The above summarize one of the essential duties of an estate planning attorney: to cover all your bases, and make sure that nothing is left to chance when it comes to your assets and decisions regarding your personal health. Below are a series of questions which one’s estate plan should hold the answers to:

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  1. Who are my beneficiaries?

It can be difficult to decide among spouse, children, and other loved ones who receives what and, more importantly, how they receive it; this is why it’s better to tackle this question earlier rather than later, while keeping tabs on your choices should they change later in life. As discussed in previous blogs, a trust can ensure specificity and avoidance of fighting and court proceedings in case the worst should ever happen.  Trusts may also be used to protect your hard-earned assets from creditors or to make sure your assets go to your children or grandchildren, and not your son or daughter-in-law.

  1. Who do I trust to make important financial and medical decisions on my behalf?

Leaving your loved ones without a Trust, Power of Attorney, Advance Healthcare Directive, or Will addressing the above can lead to nightmarish infighting over the answers to this question should you become incapacitated or pass away. All of the aforementioned documents should be included in your estate plan.

  1. What about my minor children and pets?

Appointing responsibility for a minor child’s care is a difficult yet important decision which must never be left for “later.” Should the worst happen without a designee having been appointed, a judge will be making the decision in your stead. A trust can also account for the care of your pet(s); we know that pets are family too.

  1. Computers/Online Accounts?

As much of our financial management, personal photographs, and communication are now stored digitally, you might want to include directions in a trust or will as to what should be done with your computer and online presence when you are no longer there to manage them. Compiling usernames, passwords, and specific directions for your computer and each account and storing them in a safe place can save your family much time and trouble, as well as save some valuable memories for future generations along the way.

  1. What to do with my body after I’m gone?

Although you could leave it to loved ones to decide what should be done with your remains, it is usually better to clarify this in your estate planning documents so that there is no room for argument, and so that you can avoid subjecting loved ones to the stresses involved in making such a decision following your passing.

The above questions are just a few of the points a proper estate plan should cover. At Estate Planning Group, we can assist you in answering these as well as other questions in the course of planning your estate, minimizing the stress on you and your loved ones should the worst ever occur.

For more information on how we can assist you, please feel free to contact us and a representative will contact you within one business day.

You can find more information on probate proceedings here.

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