Serving Indiana Since 1975

July 2020 Newsletter

| Jul 18, 2020 | Firm News

JULY 2020


     The information that follows summarizes some of the current issues in the areas of estate, tax and personal and business planning which may be of interest to you. Although this information is accurate and authoritative, it is general in nature and not intended to constitute specific professional advice. For professional advice or more specific information, please contact my office.

     A Reminder Regarding Document Review And File Retention. We generally recommend that our clients review their estate planning documents, including not only their wills and trusts, but also powers of attorney and health care advance directives, every five years, or even more frequently as circumstances may warrant. If there is a significant change in your family or financial circumstances, or if there has been a serious health diagnosis, then your documents should be reviewed then. If a client’s goals initially may have been to protect a child or another family member, and yet as the client has aged, or due to adverse health events, asset protection becomes an important concern, then a review is appropriate. The emphasis of asset protection planning is significantly different than matters relating to the ordinary disposition of assets at death. There can also be a need for change due to retirement, the sale of a business, or the sale of investment assets having substantial value. A power of attorney may have been written to be “springing” into effectiveness in the event of incapacity. However, as we age, It might make more sense for a power of attorney to be immediately effective without having to deal with the issue of incapacity.

     Our normal file retention policy is five years. Our clients are advised of that policy at the inception of the attorney-client relationship. We typically try to contact clients after approximately five years in the case of estate planning arrangements to remind them of the desirability of reviewing those arrangements. We quite often do not receive a response, and as a result, after a period of time, files are destroyed. We would still have access to information through our computer files, but we no longer retain actual signed documents. It should be noted that my office does not retain original wills under any circumstances although we typically do retain an original counterpart of trusts and certain other documents such as powers of attorney and health care advance directives. However, clients have multiple counterparts of such documents and the client is always provided with his or her original last will and testament and given instructions regarding the preservation of the last will and testament. If your circumstances are such that you believe it is time to review your documents, or if your circumstances have changed so that you feel it is now time to consider a different type of plan, please contact my office.

     Developing A Financial Plan. During the process of developing an estate plan and creating a will or trust, it is very important that the client’s objectives for retirement, asset protection, health care, housing, and similar matters be identified. The questionnaire that we provide to clients in conjunction with our initial meeting with them helps to identify the client’s objectives, identifies their assets, liabilities, and sources of income, and is directed toward assisting the client to make choices regarding various aspects of their pre-retirement, retirement, and estate planning goals and objectives. While I do not offer investment or financial planning services, I do frequently work with clients’ financial advisors, accountants, and others, as a part of the “team” of advisors who all should be working together to help the client identify his or her goals and objectives and implement arrangements to achieve them. A principal goal of estate planning is to help the client determine the best way to distribute the client’s wealth to his heirs or other beneficiaries. Retirement assets are not only a major component of their net worth, but because of the taxability of those arrangements, and the complexity of retirement planning in general, it is very important to coordinate beneficiary arrangements to achieve the desired result. One should not just assume that one needs a “simple will” and seek the preparation of such a document; it is very important to first identify the client’s goals and objectives, and then determine the most sensible way of achieving those objectives.

     Life Insurance Planning. Life insurance plays a significant role in the development of an estate plan. It can be used to provide support for dependants and a source of liquidity for expenses, taxes, and similar concerns after the client’s death. Term insurance is very costly as people age, and for those who have whole life insurance with cash value, it is possible to use that cash value in various ways during one’s lifetime in order to achieve particular estate or financial planning objectives. As noted in the last issue of this newsletter, there are “hybrid” long term care products that are based on life insurance or annuities that will allow the insured or the annuity owner to tap into the policy or contract to help to pay for long term care rather than to wait until death and then utilize the proceeds or death benefit to pass to designated beneficiaries.

     There are many common mistakes made with life insurance. Previous issues of this newsletter have addressed such common life insurance mistakes at great length. Typical errors include naming the estate as the beneficiary, thus requiring probate that might otherwise have been avoided, or failing to name a contingent beneficiary so that, due to the death of the primary beneficiary, the proceeds from the insurance end up being paid to the estate rather than to a particular beneficiary outside of the probate process. Another common problem is designating a minor child or incapacitated person, or a financially irresponsible person, as a life insurance beneficiary. When developing an estate or financial plan, life insurance must be taken into account. Readers are encouraged to examine previous issues of this newsletter regarding some of the issues pertaining to life insurance that we have previously addressed.

     Expanding This Newsletter. This newsletter is made available primarily to clients and those who are affiliated with organizations with which I have a relationship or have spoken in the past. If you receive this newsletter and know others that you think would benefit from it, please feel free to contact my office so that a friend, associate, or family member can be added to the newsletter mailing list.

     Additional Information. Future issues of this Newsletter will address other issues of current interest. Please contact my office with any questions that you might have.