Have Your Parents Planned?

As an adult, you’re fortunate if you still have your parents. However, as they get older, you may well have to assist them in some key areas of their life. Specifically, they may need you to get involved in some of their financial issues. And if you do, you may need to focus on three areas: leaving a legacy, providing for long term care, and managing finances during retirement.

While initiating these conversations may not be easy for you, it is important, and you may find your parents more willing to discuss these issues than you had thought. In any case, if your parents haven’t already done so, encourage them to work with an estate-planning professional to develop the necessary legal documents, which may include wills, trusts and financial durable powers of attorney. These documents and services can be invaluable in helping individuals find efficient ways to pass assets from one generation to the next. An estate-planning attorney can identify which arrangements are the most appropriate for you and your family.

In your discussions on leaving a legacy, you may also want to bring up the topic of the beneficiary designations that may appear on your parents’ life insurance contracts and qualified plans, such as 401(k)s and IRAs. If the family picture has changed in recent years, and your parents had intended to change these designations, they should take action sooner rather than later.

While your parents need to deal with the legacy issue, they still may have plenty of years of living ahead of them — and they might need help managing their money during these years. For starters, you may want to have a discussion about their savings, investments, insurance and so on, and where these assets are held. Are they kept in banks or investment companies? Do your parents have safe-deposit boxes? This knowledge could be valuable if you ever become involved in managing or distributing your parents’ resources.

Also, you might want to talk to your parents about the income sources they may be drawing from during their retirement. For example, how much are they taking out each year from their 401(k)s and IRAs? They don’t want to withdraw so much that they deplete their accounts too soon, but at the same time, they would no doubt like to maintain their standard of living in retirement. You may want to suggest to your parents that they evaluate their investment portfolio for both growth and income potential — because they will need both elements during a long retirement.

It is worth giving some thought to the idea of long term care.  If your parents to not have long term care insurance, you should talk with them about exploring the possibility.  If that avenue is not available, a qualified elder law attorney can often help a family find other ways to pay for long term care (in-home care, assisted living, or nursing home).  Much of this sort of elder law planning is done at a "crisis point" when the need for long term care is imminent or has already arrived.  If you take the time to help your parents plan for long term care before they need it, you will be able to plan more economically and more efficiently.   

If your parents aren’t already working with a financial advisor, you may want to encourage them to do so. Managing an investment portfolio during retirement is no easier than doing so during one’s working years — and there’s less time to overcome mistakes. A qualified financial advisor can help your parents choose the right mix of investments that can help meet their needs.

During your lifetime, your parents have done a lot for you. You can help pay them back by doing whatever you can to assist them in managing their financial, estate planning, and elder law needs.

Pet Trusts: Providing for Your Furry Family Members

Do you own a pet?  Odds are you do.  Almost 60% of American households own at least one dog or cat.  Add those of us who own cold-blooded, swimming, or feathered friends and you can see that pet ownership is a part of life for most of us.  In fact, many would tell you that their pets are members of their family.  So, what can we do to take care of our pets when we are no longer able to care for them?

Until recently, pet owners in Georgia had to plan for the care of beloved pets as they would for any other sort of property.  We would gift pets by the terms of our wills or trusts (perhaps along with a special chew toy and a little money to see to care and feeding) and hope the person receiving the pet would honor our wishes.

As of July 1, 2010, things changed.  Georgia joined the ranks of many states which allow for estate planning geared toward the care and safekeeping of pets - commonly known as pet trusts.

What’s new?  Georgia law now allows people to create trusts which have animals as beneficiaries.  You can create the trust so that it exists now or you can include it in your own revocable living trust or will so that it comes into being once you (or you and your spouse) die.  The trust can last through the lifetime of the animal and, importantly, can be monitored and enforced by someone you appoint for that purpose.  So now Fido’s (or Fluffy’s) well-being need not be left to chance.  That should be a weight off your shoulders and the small furry ones who depend on you.

Jack Kingston Says Estate Tax Reform Not Likely This Year

We've been wondering for about 12 months now what's going to happen with the estate tax after the 2010 repeal.  We thought that Congress would extend the 2009 exemption and tax rates before the end of 2009, but to our surprise, Congress did nothing.  Since then, we've been constantly monitoring the situation thinking that something would happen.  Now it's October and still no action.  Last night, I had the good fortune to run into our First District Congressman Jack Kingston and I thought well, now I have the opportunity to ask a Congressman what he thinks will happen, so why not.  I asked Mr. Kingston if he thought we would see any action on the estate tax this year.  He replied "I don't know."  He said that the Senate keeps holding up any reform, and he doesn't see much hope that something will happen this year.  Seems he's as confused by what's happened as the rest of us.  He added that he was in support of a $5 million exemption and a return to the old step up in basis rules.  He further said "If the Republicans are elected, we will take action immediately."  He felt like they could get something done before April.  So, while things are still unclear, and trying to counsel clients on the estate tax remains difficult in light of the uncertainty, if we do return to a Republican majority in November, we should get some clarity relatively quickly.