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Oscar Nominated Film Highlights Guardianship Issue…

Oscar Nominated Film Highlights Guardianship Issue…

OSCAR NOMINATED FILM HIGHLIGHTS ISSUES FOR GUARDIANS AND TRUSTEES

            The movie “Manchester By the Sea” recently garnered an Oscar award for Casey Affleck, who won “Best Actor”.  In the movie, he plays a man dealing with the loss of his older brother who soon discovers he is the backup guardian and trustee for his nephew.  The guardianship in the issue mainly plays in the background but it highlights what I consider to be a common issue for people who’ve lost a loved one and are suddenly thrust into the role of taking care of legal affairs for the deceased.

The struggles of Affleck in the movie are familiar ones for people who’ve been in that position.  His character is shocked to be in charge, never actually expecting to serve as guardian and trustee.  He struggles immediately to straddle the line between the unfamiliar role of assertive father to his nephew while also trying to find middle ground between the needs of the nephew and his own life.  In particular, Affleck struggles with the prospect of relocating his life back to a place that he left for good reason, all in service of his brother’s wishes.

He struggles with the emotional details of arranging the funeral of his departed brother, including having to delay the burial because it’s the middle of winter.  He has to delay his own grieving process to assist the nephew with his.

It’s actually these struggles that make the movie so moving and well done.

I rarely find myself impressed with how Hollywood portrays legal issues on screen.  From the imaginary fiction that the death of every person require a dramatic reading of their will at a cramped law office to the ridiculously dingy and dim lighting of New York city courts in “Law and Order”, Hollywood mostly fails to find a middle ground between reality and fantasy in its portrayal of legal matters.

This movie is different in that respect.  It captures the essence of the pain of dealing with death, from the obvious standpoint of emotion but also with the pesky details that have to be covered when it happens.

In my own practice, the reality of how my clients choose people to be in charge of their estate plan often takes quite a bit of time with clients.  Part of that reality is a suggestion from me that my clients actually talk to the people that they name as guardians, powers of attorney, trustees and executors.  Seems like common sense but it’s surprising that often people don’t discuss these matters.

Is that a role the chosen person will actually fill if necessary?  Do they have a life now that would allow for time to be effective if they were suddenly the legal guardians of your children?  Are they being chosen just because they’re a relative and nearby?  Are they too old already to serve if the time to serve was a decade away?  Do your children have a close relationship with the person you chose or is it just you that is close to that person?

I will give away one secret about the movie:  Casey is a better actor than his brother.

 

 

Estate Planning For Children Struggling With Addiction…

Estate Planning For Children Struggling With Addiction…

 

 

 

ESTATE PLANNING FOR CHILDREN STRUGGLING WITH ADDICTION

                     Many parents who have children struggling with addiction or mental illness are often too consumed with caring for those children in the present to given thoughts about who and how those children will be cared for when they are gone. 

It’s a question I ask just about all of my estate planning clients who have children…do your children now or have they struggled in the past with alcohol, drugs, gambling or mental illness?  I’ll remind those clients that there is no stigma about their children’s addiction in my office.  I’m there to help and frank discussion of this issue is unavoidable for proper estate planning. 

So how might estate planning differ in this situation?

We start with a couple of baseline rules.  First, we acknowledge that an addicted child may never recover.  Second, because the child may never recover, we must ensure that the child never has easy access to funds, even if non-addicted children do have easy access. 

A special purpose trust is often the answer.  They offer traditional estate planning goals such as avoiding probate, minimizing taxes and ensuring the intended beneficiaries are named, but also can be tailored for unique family situations involving addiction.  Parents can include language that allows the trustee to deal with both the good and bad, including incentivizing the child to meet certain goals or requirements to receive a distribution from the trust.  An example would be staying sober as evidenced by a drug test or staying on a certain medication that helps the child control their addiction.

In 2017, delaying distributions of principal, as I’ve discussed in prior articles, is not always a bad thing.  As with estate planning for children who are spendthrifts, not distributing assets means they will be invested with a competent financial advisor instead, meaning the money should grow.  If the addiction problem worsens, this provides more resources to fight the addiction.  If the addiction problem recedes, the trustee has more resources to support the child and to encourage their growth through education and career changes.    

Another consideration for proper planning should be to have the child execute a healthcare power of attorney and HIPAA release after they reach 18.  These documents could allow you to help a child in crisis.  Without these documents, you have no legal authority to speak with doctors and discuss medical records and decisions.  While these documents can of course be revoked by your child, having them in place first is preferable to not having them at all. 

Estate planning for addictive children is different but much the same.  With careful consideration you can ensure that you protect your child from their addiction and from themselves. 

TERMS USED IN MISSOURI GUARDIANSHIP AND CONSERVATORSHIP

One of the things that I enjoy the most about practicing in the area of probate matters is helping families get appointed guardian and sometimes conservator for their children with special needs or an elderly parent.  It’s a rewarding process to assist a family with these types of cases and to see what a difference it makes in the person’s life.

There are a variety of terms used in the process of obtaining guardianship and conservatorship and this article covers not only the terms but their definitions*.

Here they are:

Adult – A person who has turned 18 in the state of Missouri.

Conservator – A person or corporation that has been appointed by the court to care for an have custody of the property and finances of a minor, elderly or disabled person.  This person oversees and makes decisions related to the financial affairs of the person.

Disabled Person – A person who is unable by reason of any physical or mental condition to receive and evaluate information or who lacks the ability to communicate decisions needed to manage his financial affairs and resources.  A person can also be partially disabled.

Guardian – A person appointed by the court to represent a minor or an incapacitated person.  A limited guardian is a person whose powers are limited by the court to only certain functions.

Guardian ad litem – A person appointed by the court to represent a minor, incapacitated person, a disabled person or unborn person in certain cases.  The guardian ad litem or “GAL” is appointed for a limited period of time or for a specified purpose.  In many guardian cases, the GAL is an attorney appointed by the court.

Incapacitated Person – A person who is unable by reason of any physical or mental condition to receive and evaluate information or to communicate decisions to such an extent that the person is unable to provide himself with food, clothing, shelter, safety, or other care that would prevent physical injury, illness, or disease from taking place.  This term includes partially incapacitated person.

Least Restrictive Environment – The residence of an incapacitated person which imposes on the ward only such restraints which are necessary to prevent him from injuring himself or others and which provides him with such care,  habilitation and treatment as is appropriate considering his physical and mental condition and financial means.

Manage Financial Resources – The ability to obtain, administer, dispose of real and personal property, business property, benefits, income or property; or to provide for the care and support of yourself or anyone under your care by ordinary skills and intelligence based on training and education.

Minor – Any person under the age of 18 in Missouri.

Partially Disabled Person – A person who lacks some, but not all, of the abilities necessary to manage his financial affairs.

Partially Incapacitated Person – A person who lacks some, but not all, of the abilities necessary to provide himself with food, clothing, shelter and other essential care.

Protectee – A person for whom a conservator or limited conservator has been appointed.

Respondent – A person who is alleged in a petition to be incapacitated or disabled.  The term is used in written notices of hearing of guardianship or conservatorship and during the court proceedings.

Ward – A minor or an incapacitated person for whom a guardian or limited guardian has been appointed.

*These definitions can be found in the following Missouri statutes:  RsMo. 475.010 and RsMo. 1.202.

Trustee Fees for Trust Administration in Missouri…

Trustee Fees for Trust Administration in Missouri…

TRUSTEE FEES FOR TRUST ADMINISTRATION IN MISSOURI

               A trustee is a fiduciary named in a trust to manage assets for the benefit of trust beneficiaries.  Serving as a trustee is a lot of work and our firm assists trustees in Missouri with administering trusts, including special needs trusts and spendthrift trusts.  The question of how much a trustee should be paid for their services is very common.

First, the trust document itself should provide a standard for setting fees or sometimes (increasingly rare) will just state how much the trustee should receive each year.  I counsel all of my clients to remember that if you want your trustee to accept the role, and all the responsibility it entails, you don’t want to be cheap when it comes to deciding their fee to serve.

That’s why I normally recommend language in the document stating that the trustee fee should be a “reasonable fee based on the time and effort” of the trustee.   This language is intentionally broad to allow for any number of circumstances.  As an example, say you pass away and the trustee you named, your brother agrees to serve but lives out of state.  If he has to fly in a few time a year to meet with the beneficiaries, the loss of his time should be considered in his fee and obviously his reasonable travel expenses will definitely be paid out of trust funds.  However, if the trust principal is managed by a financial advisor, he hires an attorney to advise him on managing the trust and has an account prepare the trust tax return (as they should if they are not an accountant), then those professionals will also charge a fee for their services.  It also means the trustee has spent less time in his duties.

Providing for a specific fee amount or percentage of the trust estate is not something I usually recommend to clients.  The reason is simple.  If you say that your trustee gets $5,000.00 per year and pass away with $2 million in trust assets, that is a pretty small fee and likely to cause your chosen trustee not to serve.  Well, if they won’t serve, there’s a chance your alternate successor trustees won’t serve either.  You could end up with no one being able to serve.  In that case, someone, probably a beneficiary, would have to file a court case in Missouri to have a trustee appointed.  This is not only a waste of money but easily avoidable.  If you must have a concrete fee figure stated in your trust, I recommend a percentage.  Corporate trustees usually work on a percentage fee basis and it’s not a bad idea because it accounts for differences in the size of the trust estate.  If there’s more assets to be managed, the fee would be higher but there’d be more to do.  If less assets, the reverse would be true.

Missouri does have a statute related to compensation of a trustee, which is RSMo. 456.7-708.1.

Here is the link:  http://www.moga.mo.gov/mostatutes/stathtml/45600707081.HTML

The statute provides that compensation is governed by the trust document but if not mentioned then the fee is entitled to compensation that is “reasonable under the circumstances”.  There’s that “reasonable” word again.  The statute further provides that a court may increase or decrease the fee specified by the trust document if it would be unreasonably high or low.

If you’re putting together a trust I first commend your for taking proactive steps to protect your family and your assets.  Just make sure to treat your trustees fairly too.

THE FUTURE OF RETIREMENT AND THE IMPORTANCE OF THE REVOCABLE TRUST…

THE FUTURE OF RETIREMENT AND THE IMPORTANCE OF THE REVOCABLE TRUST…

THE FUTURE OF RETIREMENT AND THE IMPORTANCE OF THE REVOCABLE TRUST

As an estate planning attorney, I have had an interesting viewpoint of how the Great Recession affected my estate planning clients. Over the last two or three years, I have noticed a consistent worry of clients during initial conferences. They seem to be more worried in some cases about their children’s ability to retire than their own.

It makes sense. The Great Recession had far reaching effects on our country’s economy and some of those effect are still being felt today. But those with investments, they have not only recovered their nest egg but since increased the size of it handsomely as the stock market has reached all time highs. Retirement age parents, however, are concerned about their children’s student loan debt, costs of housing, delayed family creation and just generally about their well being when they are gone.

I met with a client couple recently who told me that each of their children had graduate degrees from prestigious schools and were now out in the world. One found a job pretty quick since he is in software engineering, but is getting crushed by a $1,500 per month condo rental, plus $1,500 per month in student loans (for the next 30 years). The other child had graduated last year, could not find a job in our area in her chosen field (computer science) and had taken a job as an office assistant at a company in St. Louis. She lives with them.

Each of them told me that they had started watching their spending habits so that they could leave as much of an inheritance to their children as possible, despite their terrific educations and work habits. This is a sea change in estate planning for those with a decent amount of assets to leave to their children.  So what I recommended at the end of our initial conference was a living trust whereby they would each act as the trustees and then when the second spouse had passed away, a successor trustee would take over. In their case, that successor trustee was not their children but a younger brother of the husband.

When the second spouse dies, unlike is often the case in traditional revocable trust planning, the children will not inherit everything. The younger brother will manage the trust for a set number of years at which time the 50/50 split inheritance of each child would be distributed outright. That will be a considerable some based on the couple’s current assets. But the beauty of this delayed distribution is that since the inheritance of each child will not immediately be received it can be invested and grow.

In other words, we are creating a retirement plan for the children via their inheritance. Bills of the children can still be paid as a supplement by the trustee, but the principal remains invested. So upon the death of the second spouse, the balance of any student loans could be paid off but the significant money left can continue to grow. Meanwhile, since the kids have careers starting, they can continue to save for retirement themselves as well. If the inheritance was given to them right away, that may not be the case. The plan we created ensures the kids will have the best of both worlds: A retirement source via inheritance, which will grow from the delay of distribution and the retirement they create for themselves, which should be easier through the assistance of at least some of their bills being paid as needed by the trustee of the revocable trust.

As an aside, I am not a financial advisor but one significant way retirement planning has changed and will continue to change is the loss of guaranteed income. Pensions are largely a thing of the past and workers have to invest more into building a larger nest egg so that they can replace that lost pension check, if necessary, with a draw from the nest egg itself. Many of my clients still enjoy significantly high incomes from combined pensions and Social Security. This can leave their nest egg largely intact. However, their risk tolerance is much lower than someone like their children. This again reinforces the beauty of the plan I outlined above.

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