Category: Client Focused

August means school is back in session or just around the corner, signaling the return of new school supplies, homework, and pop quizzes. Try your hand at this estate planning pop quiz to see if your knowledge of estate planning makes the grade and if it is time for us to schedule a meeting.
 
Question #1: True or false? You must name the same person to make both your financial and medical decisions on your behalf.
 
Answer: False. When choosing who should be your trusted decision makers, you should select individuals based on their strengths. In other words, you should consider what characteristics or traits each decision-making role requires and select the people who have those traits. For example, if one of your children is a doctor and another child is a certified public accountant (CPA), then it makes sense that the doctor would make medical decisions on your behalf and the CPA would make financial decisions on your behalf. It is also a common misconception that you must choose the same person to be your children’s guardian and to handle the money that you leave for your children. This is false: you can choose the person who you think will make the best and most loving guardian for your children and choose another person to handle the finances.
 
You may also need to consider that choosing the right person for the job could mean going with a professional. If none of your children have the organizational skills or focused temperament to handle administering your estate, or if your children are type A personalities that would second-guess every decision made by a sibling, then perhaps the best option would be to appoint a professional to act as one of your trusted decision makers. This could end up preserving your property and family relationships.
 
Question #2: True or false? If I do not create my own estate plan or if my plan fails to provide for my current situation, my state’s law will decide what happens.
 
Answer: True. Every state has default laws (called intestacy laws) that kick in if a person has not made their own estate planning choices. These laws are designed with a “one size fits most” situation in mind. For example, if you are married, your spouse will usually have priority with regard to making decisions and receiving your property because most married people would choose their spouse. However, there are innumerable reasons why you may not want your spouse to make certain decisions or receive certain items of property. For this reason, it is essential that you create your own estate plan and make your own decisions. If you have not created or finished your estate plan, now is the time to stop procrastinating and make an appointment with us to complete it.
 
If you have an estate plan, consider reviewing it in case your existing estate plan does not accurately reflect your current situation. For example, perhaps one or more of the people you chose as your trusted decision makers or beneficiaries is no longer living or able to serve, or there may be other people (e.g., a new child or a new spouse) who you want in those roles instead. When you experience a significant life event such as a marriage, divorce, retirement, change of occupation, or birth or death of a loved one, a change to your estate plan may be necessary.
 
Further, the ever-changing laws governing taxes and estate planning may necessitate an update to your estate plan. Even if no change is required, a periodic review with your estate planning attorney will give you peace of mind knowing that your plan will work as anticipated when the time comes.
 
Question #3: True or false? A will accomplishes all of the same goals as a trust, but a will is cheaper.
 
Answer: False. While both a will and a trust can give instructions about how you want your property to be distributed upon your death, one of the biggest differences between a will and a trust is that a will has no effect until the time of your death. A trust, on the other hand, can be utilized to deal with a period of incapacity (a time where you cannot make or communicate your wishes) that may occur prior to your death, which can be very helpful for loved ones trying to care for you. For example, Son wants to sell Mom’s home to help pay for the cost of an assisted living facility for her. If Mom only has a will, then Son has no power to sell the home and must go to court to be given the authority to act on Mom’s behalf. This situation might be avoided if Son was named as an agent under Mom’s financial power of attorney, but relying on this as the only method can sometimes be problematic. On the other hand, if Mom’s home was owned by her trust, then Son, acting as successor trustee, would have the power and authority to sell Mom’s home without court intervention.
 
In addition, a will guarantees that your loved ones will have to go through the probate court process upon your death. The executor or personal representative who you have named in your will must be approved and appointed by a probate court to have the power to deal with the property in your estate. On the other hand, when you use a trust and properly fund it, your successor trustee can immediately step in and deal with the property in your trust without any court intervention.
 
No matter your score on this estate planning pop quiz, you can be an A+ student by ensuring that you have a specially tailored plan in place with carefully chosen trusted decision makers. We can help you create or update your plan to ensure that it will work as you intend when the time comes.

Along with warmer weather and lazy days spent at a pool, summertime also often includes a family gathering, such as a Fourth of July barbecue, a family vacation, a reunion, or time spent at a family cabin or lake house. Whatever the form, in our always-on-the-go society, getting the whole family together is a rare occurrence. Consider taking advantage of this time together to discuss your estate and financial wishes with your family by including a family meeting in your family gathering.

What Should You Talk About in a Family Meeting?

Although there is no right or wrong answer to this question, a family meeting could cover the following topics:

• Who you have appointed as your trusted decision makers. You can let your family members know who you have selected to be your executor or personal representative, successor trustee, and agents under financial and medical power of attorneys. You may also consider explaining the reasons why you have chosen these people to act in these roles.
• What your end-of-life wishes are. People sometimes select a healthcare agent to act on their behalf but then never discuss with that agent their end-of-life wishes. This puts the agent in the uncomfortable position of trying to guess what the person would have wanted or being presented for the first time with the person’s wishes in an advance directive or living will in a moment of crisis. Expressing your end-of-life wishes in a family meeting helps ensure that everyone is on the same page when the time comes for decisions to be made on your behalf.
• What specific tangible personal property family members want. A family meeting can be a great opportunity for family members to express their hope of receiving certain items of tangible personal property, such as furniture, jewelry, art, and vehicles. We are often surprised to learn the items that family members have emotional attachments to. For example, your daughter may wish to have the platter you always used to serve the Thanksgiving turkey. The family meeting is a great forum to express these wishes.
• Who will receive certain tangible personal property and why. Along with family members expressing their wishes to receive certain items of tangible personal property, a family meeting is the perfect opportunity for you to express who you wish to receive certain pieces of tangible personal property and why. Particularly if multiple people want the same item (such as Grandma’s wedding ring), a family meeting can be a great time to discuss who should receive the item and why. Family members are more likely to respect your wishes if you make them known, and future disputes can be avoided. You can even pass on some of the items at the family gathering so you can witness the joy that the gift brings your loved one.

Use the Family Meeting to Create a Family History

The topics discussed in a family meeting do not have to be limited to issues related to your estate and financial plans. A family meeting is also a great time to reminisce about favorite family memories. Hearing family members share their favorite memories and seeing the sparks of recollection in others is a lot of fun and can be the best part of a family meeting.

Because family legacy is about more than just money and property, we recommend video recording or having someone take notes about the memories shared so the information will be kept for future reference for all family members. A family history like this is often the most cherished family possession.

Invite Your Trusted Advisor to Conduct the Family Meeting

If you are hesitant about having a family meeting because you do not feel that you have the skill set or an adequate level of knowledge to explain the sometimes complicated legal or financial concepts involved in your plans, consider asking your trusted advisor to conduct the family meeting. After all, it is one thing to understand a concept when it is explained to you and quite another to try and explain the concept to someone else.

You may also feel uncertain about how your family will react to the estate and financial plans you have made. Having your advisor, an unrelated and objective party, there to explain your plans and their benefits and answer any questions or concerns that your family members may have can remove some of the emotional upset and criticism that could emerge.

Summertime is a common time for families to get together. Take advantage of this time to discuss your estate and financial wishes with your family in a family meeting. Communicating your plans to your family now, while you are alive and able to answer any questions or concerns family members may have, greatly increases the likelihood of your plan working as it was designed. We would be happy to help you organize a family meeting or even conduct it for you, so please give us a call if you would like to include a family meeting as part of your family’s summer gathering.

The month of May means not only the end of the school year and the beginning of summer but also the beginning of the busiest moving season of the year. That’s why May is National Moving Month. There is a lot to think about when moving: along with organizing and packing up all of your belongings, there is also starting and stopping utilities, mail forwarding, updating voter registration, and so on. While the ever-growing number of items on your moving to-do list may be overwhelming, it is important not to overlook two essential items that should be added to your moving checklist: (1) locating your important documents and (2) meeting with your advisor team.
 
Locating Your Important Documents
 
In all of the chaos of moving boxes and packing tape, it is easy for things to get lost in the shuffle or even thrown out during a move. Yet certain important documents, such as birth certificates, social security cards, passports, financial statements and estate planning documents, should not be packed up and put on the moving truck along with your dishes and shoes. Keep these important documents safe and accessible during your move and ensure that they do not get thrown out by accident.
 
One idea is to purchase a portable file box with an attached lid and a secure latch. You might consider purchasing a brightly colored one so that it is easily identifiable. Then, place this file box in a secure and easily accessible location. If you are moving locally, a logical place might be at a family member’s or friend’s home. If you are moving a longer distance, that place might be the trunk of your car.
 
It is also wise to have electronic backup copies of all of your important documents. This could take the form of taking pictures of your documents and saving them to your smartphone, a password-protected removable flash or external hard drive, or storing them in the cloud. Then you will at least have a copy of these important documents in case you cannot locate the original.
 
By adding this simple step to your moving checklist, you will save yourself a lot of time and headache when, for example, you are not having to run around searching through unpacked boxes for your children’s birth certificates so that you can register them for their new school.
 
Meeting with Your Advisor Team
 
Along with contacting the moving company, it is also a good idea to reach out to your team of advisors during a move. For example, one of the pressing questions associated with a move is how much it will cost. Although the final calculation of cost will depend on factors such as the size of your home, the distance you are moving, and your willingness to take on DIY projects, your financial advisor can help you set a moving budget that aligns with your long-term financial goals.
 
If you are moving to a new state, it is also advisable to contact your estate planning attorney. In general, a will or trust created in one state should be valid in your new home state. However, some documents, such as a financial or medical power of attorney, can be state-specific. Because estate planning laws vary by state, it is highly recommended that you have your estate planning documents reviewed to ensure their validity in your new state. Your attorney can review your documents or connect you with an attorney in your new state who can review them for you.
 
If you are married, your out-of-state move may have additional estate planning implications if you are moving to or from a community property state. Currently, there are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, there is a presumption that property acquired during the marriage is owned equally. On the other hand, property acquired by gift or inheritance or that is brought into the marriage by one spouse is separate property. Moving from a community property state to a noncommunity property state (i.e., a common law state) or from a common law state to a community property state raises questions about whether community property remains or becomes community property. For example, if a couple acquires a home in California during their marriage and then moves to Nebraska and purchases a new home in Nebraska with the proceeds from the sale of their home in California, is the new Nebraska home community property? Your estate planning attorney can help answer these questions for you and advise you about the steps you should take to preserve certain tax benefits that may be available to you.
 
There is a lot to think about when moving, but locating and safekeeping your important documents and meeting with your adviser team are two essential items that should be added to that moving checklist. If you are moving soon, please reach out to us so that we can help ensure your move goes smoothly.

When it comes to death and what to do with a deceased’s remains, most people think of only two options: burial or cremation. However, these options are not particularly environmentally friendly. Burial, which is arguably the worst option from an environmental standpoint, uses an estimated 100,000 tons of steel, 1.5 million tons of concrete, 77,000 trees and 4.3 million gallons of embalming fluid every year.^[1] Some of that 4.3 million gallons of carcinogenic embalming fluid likely leaks into the earth, polluting our water and soil. Cremation, often considered the greener option, is not much better. Some estimate that one cremation uses about as much gas and electricity as a 500-mile road trip and gives off around 250 pounds of carbon dioxide.^[2] If you are more environmentally minded, here are some nontraditional, eco-friendly burial ideas. An added benefit is that many of these environmentally friendly ideas are also less expensive than the traditional options.
 
Aquamation
 
Aquamation (also known as water cremation or alkaline hydrolysis) is a water-based alternative to traditional cremation. The process, which has been legalized in about twenty states, uses a solution of water and potassium hydroxide or sodium hydroxide, which is heated to approximately 350 degrees Fahrenheit. At the end of the process, only the bone matter is left, which can be dried and crushed and given to the deceased’s family to do with as they please. Desmond Tutu, the Anglican archbishop, anti-apartheid leader, and environmental advocate, requested aquamation instead of cremation by fire likely because he knew that aquamation uses an estimated 90 percent less energy than cremation by fire. After the aquamation process was complete, his ashes were interred in St. George’s Cathedral in Cape Town, South Africa.
 
Mushroom Burial Suit
 
Actor Luke Perry, probably best known for his role as Dylan McKay on the Beverly Hills, 90210 TV series, was buried in a specially made biodegradable mushroom suit after his organs were donated. While this may sound like a quirky celebrity antic, the creator of the mushroom burial suit says the mushroom spores that line this special suit are trained to consume dead human tissue. Human remains contain toxins that are released into the atmosphere during cremation or through other methods of burial. Mushrooms can absorb and purify these toxins, resulting in a cleaner earth. After breaking down human tissue, the mushrooms conduct the nutrients from the body to fungi in the soil that then pass these nutrients on to trees.
 
Green Burial
 
If being buried in a mushroom suit is not your preferred method, you may want to consider a green burial. A green burial is similar to a normal burial except no embalming fluids or toxic chemicals of any kind are used. Rather than using a gas-guzzling machine to dig the grave, the green burial ground staff—or even your loved ones themselves—dig the grave by hand. To allow the body to decompose in a natural way, no cement burial vault is used, and only caskets made from biodegradable materials, such as wicker, are used. Alternatively, the casket can be eliminated altogether, and the body can simply be buried in a cloth shroud. Many green burial grounds are used as animal and plant conservation sites.
 
Sea Burial
           
If you love the ocean, a sea burial may be perfect for you. Sea burials may be a more familiar eco-friendly option, as this method has been used for centuries by Vikings, pirates, and sailors. Today, sea burials may take the form of using a water-soluble urn or submerging a modified casket down to the ocean floor. More environmentally conscious sea burials may use natural burial shrouds or mix the person’s ashes with an eco-friendly concrete that is used to construct artificial reefs that foster aquatic life.
 
Recomposition
 
Recomposition, or body composting, is the process of converting human bodies into soil using natural means. The body is placed in a container with a mixture of wood chips, straw, and other organic materials that are then exposed to heat and oxygen to accelerate the decaying process. After about thirty days, the remains decompose into about a cubic yard of soil, which your loved ones can use in their gardens. Unfortunately, if you want to return to Mother Earth in this way, body composting is currently legal in only three states: Colorado, Oregon, and Washington. However, more states are considering legalizing the process, and body composting may soon gain in popularity.
 
Making burial decisions after your passing can be an emotionally stressful experience for your family members who are left behind. These nontraditional methods may not be the first thing your family considers, so if you want your remains disposed of in a more environmentally friendly way, it is important to have an experienced attorney prepare your estate plan and make this preference known in your plan. We can help you create a comprehensive burial plan in advance that will reduce emotional stress for your grieving family members at the time of your death.

We all plan for “just-in-case” scenarios. When packing for our week-long vacation, we throw in a rain jacket even though the weather forecast is sunny—just in case. When planning for the future, it is also important to consider what will happen just in case one of your loved ones becomes disabled.
 
We tend to think that disability is something that affects other people. But approximately 61 million adults in the United States live with a disability—that is one in four adults.^[1] And more than one in four twenty-year-olds will become disabled before reaching retirement age.^[2] Disability is unpredictable, and accidents or serious physical or mental conditions, such as cancer or mental illness, can happen to anyone at any age.
 
As helpful as it would be when planning, no one has a crystal ball to see into the future. We do not know when we will pass away, and we do not know what position a beneficiary will be in at the time of our death. So even if you do not currently have a loved one who is disabled, it is critical not to overlook the question of what will happen if your loved one becomes disabled at a future time.
 
If a loved one becomes disabled, they may need to rely on financial assistance from government programs such as Medicaid or Social Security Disability Insurance. Unfortunately, a monetary gift or inheritance from you may disqualify this loved one from receiving these public benefits. In this situation, your well-meaning gift could become more of a curse than a blessing.
 
Standby Supplemental Needs Trust
To avoid the possibility that a disabled loved one will lose government benefits because they have too much money, you may want to consider setting up a standby supplemental needs trust as part of your estate plan. The terms of a supplemental needs trust provide that the trust’s money and property are only available to supplement the government benefits a beneficiary may be receiving. Therefore, the trust’s money and property are not included as available resources when determining a beneficiary’s eligibility for government needs-based benefits. A “standby” supplemental needs trust does just what its name implies: the supplemental needs trust is not created automatically but is on standby and comes into existence only if a beneficiary is disabled at the time of your death or, depending on the applicable state’s eligibility rules, becomes disabled at a later date but before the trust has been fully distributed. If the disabled beneficiary is receiving public assistance at the time of your death, the inheritance the beneficiary receives from you in a supplemental needs trust will not disqualify them from the public assistance benefits they are receiving but instead can be used to supplement the benefits they are receiving from the government and enhance the beneficiary’s life.
 
Since no one knows what the future holds, nearly every estate plan could benefit from including standby supplemental needs trust provisions. If the standby supplemental needs trust is not needed at the time of your death, then the trust will not come into existence. But it does not hurt to include it—just in case.

February 21 is the day on which we celebrate several US presidents who made noteworthy contributions to our country. As with any discussion that involves politics, a discussion about US presidents risks generating a variety of opinions about which reasonable minds can disagree. However, politics is not the focus of this month’s newsletter. Instead, our aim is to examine a few of the important lessons we can learn from the estate planning of some of our country’s most famous political leaders.
 
George Washington
Washington was arguably the most universally beloved and revered US president. Volumes have been written about this man and what he accomplished during his life. One significant achievement that few people know about is the care Washington took to ensure that his final affairs were in order and that those who relied on him were cared for to the best of his ability. Washington’s last will and testament, widely available online in its entirety, shows that he thought carefully about his final affairs and those who depended upon him; he also remembered many individuals by making very thoughtful decisions and gifts of items of personal property or specific bequests.^[1]
 
It is worth mentioning that Washington had a rather nontraditional family situation and had to carefully consider how his estate should be distributed among his loved ones. At age twenty-six, Washington married a widow, Martha Custis, who had two children of her own from her previous marriage, whom they raised together. After his stepson, John Custis, died during the war from an infection, Martha and George Washington raised John’s two youngest children as their own.^[2] As a result of his blended family, Washington carefully crafted the language of his will to provide very specific bequests to each of his surviving family members to ensure that they were well cared for long after he was gone.
 
Washington provides an excellent example in the level of thought and care with which he crafted his estate planning. Even if we do not have the wealth that Washington died with, we can still be very deliberate and thoughtful when it comes to how much, and to whom, we leave our wealth and meaningful items of personal property. By spending sufficient time and effort to think about and memorialize how we want to leave our possessions to our loved ones, we can leave a real legacy that has the potential to benefit generations.
 
Thomas Jefferson
While equally as famous as George Washington, Thomas Jefferson’s financial situation was far less favorable than Washington’s upon his death. Despite being a brilliant intellectual and the principal author of the Declaration of Independence, Jefferson nevertheless struggled to manage his financial affairs during life. In addition, he was saddled with both debts inherited from his family and that he had assumed by cosigning on a loan for a friend who died prematurely. When Jefferson passed away, he still had significant debts that his family had to repay. Because Jefferson had valuable real property but very little liquid cash with which to pay his debts, his executor ultimately had to sell the family land at depressed market prices to raise enough cash to pay his debts.^[3] The unfortunate result of these circumstances was that very little of Jefferson’s property was able to be passed down within the family. 
 
Many families today face similar problems with illiquid or insolvent estates. This issue arises most often when a business or farm owner has significant wealth tied up in their business or land but little cash in reserve to settle debts or pay transfer taxes at death. This can cause the families left behind to feel intense pressure to sell the business or the land at significantly less than they might otherwise be able to sell it for under better conditions to raise the cash necessary in order to pay the debts or taxes that will shortly come due.
 
Life insurance is an important estate planning tool often used to provide sufficient cash to pay a deceased individual’s debts or transfer taxes. With the proper type and amount of life insurance, and by using certain estate planning tools such as irrevocable life insurance trusts, an individual can prevent a “land rich, cash poor” situation like that experienced by Thomas Jefferson’s family.
 
Abraham Lincoln
Another well-known and beloved US president—a lawyer, no less—very surprisingly died without a will or any other type of estate planning in place. Lincoln, like so many of us, quite possibly believed that he had many more years to address this important task. His tragic murder at the hands of a political malcontent plunged Lincoln’s family into a confusing and completely unfamiliar situation as they attempted to settle his affairs with no knowledge of where to begin. His oldest son, Robert, reached out to US Supreme Court Justice David Davis to take charge of Lincoln’s affairs.^[4] Justice Davis generously stepped away from his duties on the court to assist the Lincoln family with the local court process for settling Lincoln’s estate. His estate was divided between his wife and his living sons, most likely according to the default laws of the jurisdiction. However, it remains unclear whether this is how Lincoln would have wanted to see his property divided.
 
A key lesson is that no one knows when they will pass away. Even someone as important and well-versed in the law as Abraham Lincoln was caught unprepared for his untimely demise, sadly leaving others to guess what his wishes would have been with respect to his property. The family undoubtedly experienced significant distress and frustration as a result of not having a clear understanding or plan in place for handling Lincoln’s final affairs. Had Lincoln put some basic planning such as a will or a trust in place prior to his death, perhaps he could have helped ease his family through a very challenging time when he was no longer available to them.
 
Learning from These Presidents
There is a great deal more that could be discussed and learned from the experiences of these and other US presidents as it relates to estate planning. We hope these lessons will help you think about your own estate planning and what you might want to do differently going forward. Give us a call if this newsletter has prompted you to consider any changes you may need to make in your own planning. We would be more than happy to visit with you and discuss your thoughts. Until then, Happy President’s Day!

Not only is January the first month of a new year, it is also a time when many celebrate Hunt for Happiness Week (January 16-22, 2022). Happiness is something that humanity, in large part, has spent a tremendous amount of effort pursuing throughout history. Early on, happiness likely came from simple victories such as having a full belly, surviving another day, or simply staying warm. Over time, with the progress of civilization, happiness may have come from more complex sources such as art and literature, family and romantic relationships, religious worship, access to a wider variety of food and drink, education, and novel experiences. For many people, a lifetime is spent accumulating wealth in the effort to find happiness. But does the mere accumulation of wealth guarantee happiness? It depends on who you ask, of course. But most people will agree that happiness can be found from a variety of sources beyond total dollars reflected on a balance sheet.

When it comes to finding happiness for both you and your loved ones, consider how your estate planning might play a role in that process. The following steps can help ensure that the effort you put into your estate planning will contribute to your and your family’s happiness rather than diminish it. 

Step 1: Identify what makes you happy and prioritize it.

Rather than simply assuming that property or cash will bring continuing happiness to not just you but also your family when you are gone, it is important to think about how you can use your money and property to generate happiness. Here are some examples:

• Is there a hobby that you and your loved ones enjoy that you could more easily engage in as a result of the availability of money? Perhaps you and your children have enjoyed hunting or fishing trips together over the years. Maybe you and your loved ones have a love of live theater or musical performances that has brought you joy over the years as you have shared such experiences. 
• Were your international travel experiences something that you will never forget and that you would like to help your loved ones experience as well?
• Was your education a source of joy and satisfaction over the years that you would like your loved ones to be able to experience?
• Is there a special vacation location or property that has many happy memories associated with it?

Whatever experiences and activities have brought you happiness throughout your life, the first step is to identify them and determine whether or not you would like to make them a priority in your estate planning. 

Step 2: Review your important documents to see if they reflect your priorities.

Once you have identified your priorities, you should review your important estate documents, such as life insurance and retirement account beneficiary designations, wills, trusts, pay-on-death designations on accounts, and the deeds and titles on your property. Do you understand how your accounts and property will be transferred or paid out when you die? If so, will that process realistically result in your accounts and property supporting the priorities that you have identified in Step 1? Or does your current plan risk allowing the accounts and property to be used or spent on things other than your priorities? If so, are you comfortable with that potential result? 

Step 3: Contact your advisor team to make necessary changes or additions to your planning.

If you are not comfortable with the way that your current plan meets your priorities, then it is crucial that you do not delay in addressing these issues with your professional advisors, such as your attorney and financial planner. Your attorney can help you craft provisions in your will or living trust that will set aside a sum of money to fund education for successive generations, travel, hunting trips, family reunions, or other experiences that create happy memories you would like to pass on. Further, in order for you to protect your property from being squandered on material possessions or expenses that bring little happiness to your loved ones, you may need to change beneficiary designations on life insurance, retirement accounts, or cash accounts to be payable to a trust, or make other protective arrangements that can help you achieve your priorities. 

It is only with careful planning that you can turn something as mundane and inanimate as money and property into experiences and opportunities that can bring true and lasting happiness to you and your loved ones. With proper direction from you, your advisors have the tools to help you effectively meet this worthwhile goal. Such efforts will undoubtedly increase the likelihood that you and your loved ones will find the happiness and satisfaction in life that is readily available to those who diligently seek it.

Imagine the following scenario: For years, you have worked with a valued professional advisor who has become a close friend, maybe even closer than some of your family members. You know her family, attend church with her, and know her to be a model citizen who contributes significant value to your community. This professional has suffered some truly unfortunate life circumstances with the loss of her spouse and children in a recent car accident, and the more you and your spouse discuss whom to leave your estate to, the more your professional advisor's name comes up. Perhaps you have no children of your own and you are no longer close with anyone in your own family. You would rather see your property pass to someone whom you know and care for than to just another charity that may not properly use the funds you leave to them. Working with your estate planning attorney, you and your spouse decide to leave a significant share of your estate to this professional advisor, but as a surprise. Surely, this will be a much appreciated gift for this advisor for whom you feel such affinity.
 
What Could Go Wrong?
As professional advisors, we often spend hours with our clients, becoming familiar with some of the most personal details of their lives. Being a good listener and helping our clients achieve their financial and tax planning goals can create a natural closeness and high personal regard between clients and advisors. For individuals in similar circumstances to the fictional scenario described above, naming a trusted advisor who is also a friend as a beneficiary of your will, trust, insurance policy, or retirement account can feel very natural and desirable. So why would a professional advisor ever refuse such a generous gesture from you?
 
For advisors from certain professional backgrounds, deciding whether they can accept such a gift is easy because their professional licensing organization has already decided it for them.
 
FINRA Registered Investment Advisors
For example, professionals who are registered with and regulated by the Financial Industry Regulatory Authority (FINRA) are subject to FINRA Rule 3241. This rule requires any person registered with FINRA to decline being named as a beneficiary of a client’s estate or receipt of a bequest (gift at death) except under very limited circumstances. Those limited circumstances include being a member of the client’s immediate family (as defined in the rules) or seeking and obtaining written approval from the member firm with which the registered advisor is associated to accept such a gift or bequest. The rule is fairly straightforward and leaves very little room for differing interpretations. In general, a registered investment advisor cannot accept such a gift from or otherwise be a beneficiary of a client’s estate as in the scenario described above.
 
Attorneys
State bar association rules of professional conduct govern the ethical and professional responsibilities of members of the legal profession and are frequently adapted from the American Bar Association’s Model Rules. Under these rules, attorneys are also generally prohibited from being named as a beneficiary in a client’s will or trust document that the attorney prepared.^[1] For example, the Model Rules specifically prohibit a lawyer from “preparing on behalf of a client an instrument giving the lawyer or a person related to the lawyer any gift unless the lawyer or other recipient of the gift is related to the client.”^[2]
 
Accountants
Certified public accountants (CPAs) are also subject to rules that dissuade accounting professionals from accepting gifts or bequests from clients unless it can be clearly shown that such gifts do not impact the CPA’s ability to exercise independent judgment.^[3]
 
As the above-referenced professional rules of conduct demonstrate, in an estate planning context, the general principle is that a professional should seek to avoid profiting from the death of a client. Of course, there is nothing wrong with a professional continuing to offer the services that they provide in the normal course of business to the executor of the deceased client’s estate or the trustee of their trust. But where a professional obtains a windfall from a client through a gift, bequest, or beneficiary designation that is clearly not compensation for services rendered, a professional should very carefully consider the wisdom of accepting such a gift.
 
If one of your relatives or another professional advisor were to learn of such a gift, there could be an assumption of impropriety or that your professional advisor has violated their fiduciary obligation to you by seeking to exploit the relationship of trust for improper financial gain. Accusations of undue influence or questions surrounding your mental capacity to make such gifts may arise. And even if it can be proven that your professional advisor did not in fact engage in any pressure tactics or take advantage of their position of trust, there could nevertheless be significant controversy, professional complaints filed, or even litigation against your professional advisor to get to the bottom of the situation or force some form of a financial settlement with the advisor.
 
Beyond that, even innocently naming your advisor as a beneficiary of your accounts and property could jeopardize your advisor’s professional licensure in their chosen profession, as well as significantly damage the public’s perception of the ethical conduct of other members of that profession.
 
Professional advisors with clients who want to leave them gifts or bequests from their estates should almost always politely decline, explaining the practical and ethical reasons why accepting such gifts could be counterproductive to the client, the professional advisor, and the profession in general. The advisor should then have a thoughtful discussion with the client about naming an appropriate alternative to the advisor. The professional could also help the client identify alternative charitable organizations that they may find attractive in lieu of the gift to the advisor.
 
Whatever you ultimately decide, your professional advisor will likely be able to sleep much better at night knowing that a disgruntled family member will not someday file a FINRA or other ethical complaint against them long after you have passed away and the money is spent. Furthermore, helping your professional advisor maintain the integrity and ethical standards of their profession will undoubtedly pay dividends from a professional and reputational perspective that far outweigh the financial benefits of accepting even a generous gift from you.

In the words of George R. R. Martin’s fictional characters from the noble house Stark, “Winter is coming.”
 
Along with this change of seasons comes a change in driving conditions in much of North America—slippery roads, rain, snow, less sunlight during the morning and evening commutes, and a variety of other hazards. Unfortunately, with an increase in such hazards comes an increase in the likelihood of being involved in a motor vehicle accident. But few of us have ever really considered what should be done if we are actually involved in a fender bender.
 
While certainly no two car accidents are the same, there are some general guidelines that you should follow as soon as possible after an accident.
 
First, check yourself and your passengers for any injuries. Ask everyone if they are okay before anything else. If it becomes apparent that someone, including yourself, is injured, call 911 and report the accident and the fact that there may be injuries so emergency dispatchers can send appropriate first responder help. When safety and health are at risk, your first priority should be ensuring that everyone involved can get the medical help they need as quickly as possible. If you are injured and cannot make the 911 call yourself, ask anyone you can communicate with to get medical help.
 
Next, if you and all involved appear to be safe and uninjured and you are not at risk of further danger from nearby traffic, find a safe location to move your vehicles to. If the accident involves someone else, exchange contact and insurance information with the other driver. This will ensure that you can get in touch with the other party to the accident if your insurance company or the police need to get involved to resolve any issues that arise or process insurance claims.
 
Also, even when accidents result in what appears to be only minor damage, it is still advisable in most cases to have the local police respond before the other driver leaves the scene. When it is time to file a claim with your insurance company (or respond to claims from the other driver about damages you may have caused), it is important to have a police report detailing the damages and who law enforcement determines was at fault. This will help you avoid being unfairly stuck with the liability for repairs or medical injuries that arise later (such as back and neck injuries).
 
Additionally, it is important to contact your car insurance company as soon as possible. You may want to contact them even before getting out of the car. The insurance company can provide you with crucial advice and guidance at a very stressful time to make sure that you do not make mistakes in dealing with the other driver that could have significant consequences when it comes to liability. Many people mistakenly believe that it is better not to report minor accidents to your insurer in an effort to prevent their premiums from increasing. However, this can be a dangerous approach. Failing to report an accident and allowing the insurance company to immediately get involved to mitigate possible claims for damages could lead to much larger claims against you personally and could result in your insurance company refusing to cover such claims due to your failure to report in a timely manner.
 
How Car Accidents Can Impact Your Estate Planning
 
Healthcare decision-making. In the event of an accident where you become unable to speak or make decisions for yourself as the result of an injury, you will need to have someone who can speak to doctors and medical providers on your behalf. If you have planned in advance, a medical power of attorney will allow someone you have chosen previously (your healthcare agent) to speak with doctors and arrange for treatment until you regain consciousness. If you do not have a medical power of attorney in place, decision-making authority could be unclear and might result in delays in receiving certain types of medical treatment. Thus, it is important that you not only have a medical power of attorney in place and signed, but also that you inform those closest to you about where to obtain a copy of it should you need to be rushed to a hospital in the event of an accident.
 
Adequate insurance coverage. Many people do not realize that carrying adequate insurance coverage is one of the most effective ways to protect themselves from lawsuits that would place their savings and property at risk. Ensuring that you carry adequate car insurance is one of the simplest ways to ward off a lawsuit. Beyond increasing your insurance limits on your car insurance, you may also want to discuss with your insurance broker whether it would make sense for you to purchase an umbrella insurance policy. Umbrella policies act as a form of backup insurance to your car insurance policy. Essentially, if you are involved in a car accident where the damages you caused exceed the limits of your car insurance policy, an umbrella insurance policy can step in and cover such excess liability. With both policies in place, you are providing a large enough pool of insurance money that your insurance companies will have a much greater ability to settle any lawsuit against you as a result of the car accident before it ends up in court where the plaintiff could seek payment from you directly.
 
As part of your estate planning, you should meet with your insurance advisor to discuss the limits of your car insurance and any umbrella policy that you may already have (or intend to purchase) and the types of protections that they provide. Adequate insurance can go a long way toward protecting your accounts and property from loss to a lawsuit as a result of a car accident.
 
Be Careful of Fraudulent Transfers
After a car accident where there are significant property damages and medical injuries, it can be tempting to take steps to protect what you own if you fear that a lawsuit may result from the accident. But it is important to resist the temptation to begin transferring your property and accounts to friends or family in an effort to hide what you own. In many states, taking such steps after an accident has occurred in which you are liable is considered to be a fraudulent transfer that can be ignored by the courts.^[1] In other words, even though you may have made an otherwise legal gift or transfer of your accounts and property to someone else, the courts are likely to allow the party in a successful lawsuit against you to go after and seize the property that you have transferred to someone else in an effort to avoid having it used to pay the judgement against you. Furthermore, you could be liable for additional damages for causing the prevailing party in the lawsuit to expend extra effort and expense to pursue the fraudulently transferred property.
 
No, Revocable Trusts Do Not Protect Your Property from Lawsuits
Another very common misconception is that if you create a revocable living trust for estate planning purposes, you have also protected your assets from lawsuits and creditors. Unfortunately, this is simply not the case. While it is possible to design a revocable living trust that will protect your assets after you have died from the creditors and lawsuits of your named beneficiaries of your trust (usually your loved ones), revocable trusts in general offer no protection against your own creditors or lawsuits filed against you. This is because you have complete control over the property placed in your revocable trust. And because you retain the power to revoke the trust, a judge can order you to revoke the trust and use the trust property to pay your creditors and lawsuit judgements.
 
That being said, there are certain types of irrevocable trusts and other asset protection strategies that, if designed properly, can greatly enhance the level of protection you can obtain for your property. However, you should explore these with the assistance of an experienced asset protection and estate planning attorney to ensure proper creation and implementation.
 
When it comes to protecting your accounts and property, the time for taking the necessary steps is well before an accident occurs. Doing so will help you maximize the amount of asset protection that is available to you through purchasing insurance or designing estate planning features that have a much better chance of warding off successful lawsuits in the event of an accident.
 
We hope that we have given you some things to consider and encouraged you to revisit some aspects of your estate planning. Protecting your hard-earned accounts and property is a worthwhile investment of time and effort. But remember, the time to do so is before an accident occurs. If you are not sure where to start, give us a call. We would be happy to help you take the next step in preparing for the perils that winter can bring.