minors Archives - Morris Hall, PLLC

Guardianships for Minor Children Make Reviewing Your Estate Planning Especially Important

By | Estate Planning | No Comments

It is hard for me to believe that my daughter, Erin, is already one year old.  As I think back over the last year, I am amazed by all of the things she has learned and accomplished, and I can only imagine what she will learn in her second year of life.

Now that Erin has reached her milestone of the first birthday, it is time for my husband and me to review our estate plan.  Although I typically recommend to clients that they review their estate plans every three years, there are instances in which it should be done more frequently, such as when minor children are involved or a change in family circumstances has occurred.  Since Erin is a minor, I feel it is important to review our plan every year.  It is not that I necessarily believe that we will need to make changes to our beneficiaries, trustees, agents or guardians; I just want to take the time to review whom we have chosen to be a part of our plan and what role each person will play.  My husband  and I spend the majority of our discussion about our estate plan reviewing whom we listed as guardians for Erin.  We will verify that the individuals we chose are still willing and able to serve as her guardians.

Remember that every life change has the possibility of impacting your estate plan.  Take the time to review your plan on a regular basis.

What the Attorneys of Morris Hall Can Do For You:

The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Unusual Guardianship Designations by Adam Yauch, Former Beastie Boy

By | Celebrity Estates | No Comments

Adam Yauch with daughter Tenzin Losel

There has been much discussion recently on the estate of Adam Yauch, co-founder of the popular music group, The Beastie Boys.  Yauch died at 47 years of age in May 2012 after a battle with cancer.  He had created both a Will and a Living Trust to protect his assets and his loved ones.  All aspects of the Trust remain private, keeping his asset and beneficiary information away from the prying eyes of the media.  A Will, however, is a public document and can be readily accessed by anyone.

In his Will, Yauch sets forth an unusual stipulation for his daughter, Tenzin Losel.  Yauch and his wife Dechen disagreed about who should be the guardians to their daughter if the two of them should die, so they reached a compromise.  In the Will, it is dictated that if Yauch died in a year with an even number, his parents would be appointed as primary guardians with his wife’s parents as the backup.  If Yauch were to die in an odd-numbered year, the reverse would be true.  Should Dechen pass away while their daughter is still a minor, Yauch's parents will have custody based on the stipulation regarding the year of his death.

There are two important lessons one can learn from the method with which Yauch planned for the guardianship of his daughter.  The first lesson is to create a legal document that determines the guardianship of any minor children.  This is vital.  If you fail to make this important legal designation, the court will make the decision for you, and it may not be who you would have chosen.  The second important lesson is to provide more than one person to serve as guardian.  There should always be a back-up guardian or two in case the primary is unable or unwilling to perform in their designated role.

It is always reassuring when we see the results of an individual taking the time to plan their estates.  Because Yauch and his wife planned properly, their assets and their daughter will be properly protected as needed.  While death is a tragedy, especially at a young age, the burden can be lessoned by ensuring your loved ones are protected.  We cannot prevent life’s unexpected storms, but we can protect ourselves and minimize any additional negative affects.  This is the purpose of estate planning – to ease the path after a death.

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

How to Update Beneficiaries of IRAs and 401(k)s - Naming Your Spouse, a Trust or Others

By | Estate Planning | No Comments

Are the beneficiary designations of your retirement assets, such as a 401(k) or IRA, current with your estate planning objectives? If you have a Revocable Living Trust, does it contain the appropriate provisions to be able to name the trust as beneficiary of the retirement asset?

Trust Beware: Not all Revocable Living Trusts are created equally.

If you're considering naming your trust as the beneficiary of your qualified retirement plan(s), then the trust agreement must contain specific language that gives your successor Trustee the flexibility needed to make appropriate tax elections and to allow required minimum distributions (RMDs) to be stretched out over the lifetimes of your beneficiaries.

If the appropriate language isn't in the trust agreement and you designate it as the beneficiary of your IRA, then your beneficiaries will most likely be required to withdraw all of the funds out of the account within 5 years of your death instead of over their own life expectancies. This is especially true and pertinent for those in Arizona and New Mexico.

Your selection of beneficiaries for an IRA or 401(k) is much more complicated then selecting beneficiaries for life insurance because of the built in income tax consequences for IRAs and 401(k)s.

Here are a few scenarios to be aware of when planning your retirement accounts:

Q: What happens if an IRA is left directly to your beneficiaries outside of a trust?

A: Your beneficiaries can immediately cash out your IRA and spend the money as they see fit.

Q: What happens if a beneficiary chooses to immediately cash out and spend the IRA?

A: Then not only is a stretch out of the required minimum distributions over the beneficiary's remaining life expectancy lost, but 100% of the amount withdrawn will be included in the beneficiary's taxable income in the year of withdrawal.

Q: What happens if you name your minor child as the direct beneficiary of your IRA?

A: If this is the case, then a guardianship or conservatorship will need to be established to manage the IRA for the benefit of the child until he or she reaches the age of 18. Then, once the child reaches 18, he or she can withdraw 100% of what's left in the IRA.

Properly planning your retirement accounts into your estate planning is an intricate process, and many attorneys cannot provide you with documents that meet the requirements. At Morris Hall, we create these documents on a daily basis and can help you best protect your retirement assets for yourself and your beneficiaries. Please see one of our estate planning attorneys to review whether your beneficiary designations of your IRA and 401(k)s are in line with your estate planning objectives. Call 888.222.1328 today for a free consultation and/or a free review of your existing estate planning.

Morris Hall has the experienced attorneys you need!

The attorneys at Morris Hall have 100's of years of combined experience ensuring that families' assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!

 

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation. 

Whom Do You Trust with Your Child?

By | Estate Planning | No Comments

My husband and I had a very hard time deciding who should raise our daughter in the event we both pass away while she is still a minor. We knew choosing a guardian was the most important decision we had to make with regards to our estate plan because if we did not do it, anyone could petition the court for this job and the court has the discretion to name whomever they feel is best.

For many families the issue is not that there is no one to take care of the minor child(ren). The issue arises in how to choose the best person for the job. In our case, all of our family and extended family would step forward to care for Erin. The issue was who would raise Erin the way we would have if we were still alive. While we love our family, not all of them would be a good fit to parent Erin. We understood that the person(s) we appointed as guardian would not change their lifestyle just because they were now in charge of Erin. We were looking for guardians who, right now, would be able and willing to care for Erin. Some of the guardian characteristics we identified as being important to us were:

  • Love - will the potential guardian love Erin as if she were their own child?
  • Values - does the potential guardian have the same values as us?
  • Religious belief - would the potential guardian raise our child in our religion?
  • Age - is the potential guardian old enough (or young enough) to handle raising a child? Will they have enough time and energy?
  • Location - would Erin be required to change school districts or move to a new state?

Deciding on guardians is not a static decision. I recommend reviewing this list every one to three years. The individuals you think are a good fit today may not be in the future. You may disagree with their parenting style or they might move far away. Not only will your guardians' behaviors change but what you think of as important attributes for a guardian will change over time as well.

My final recommendation, although many practitioners will disagree with me, is to talk to prospective guardians about their willingness to serve in this role for your child(ren). Recognize that it may be an uncomfortable conversation and be willing to accept the fact that not everyone can or will want to take on this responsibility.

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall? First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters. Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others - which means that we can better protect your assets and your loved ones. We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership. If you have assets and loved ones that you want to protect, you are in good hands with MH. Contact us today at 888.222.1328 to schedule an appointment!

Phoenix Attorney, Estate PlanningContributed by MH attorney Katherine A. O'Connell


This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Don't Worry About a Thing! The Politicians Will Fix It...Right?!?

By | Estate Planning | No Comments

Don't worry about a thing. All of your concerns and problems will soon be resolved. Come next January, our country will have no problems, and all of your financial woes will be solved. I have listened closely to the candidates, and they all promise a solution for everyone's financial and social struggles. What a great relief!

Well, perhaps it's not quite so easy. With all their good intentions, the politicians can't solve all your problems. Neither can you; but you can do much to eliminate problems upon your potential incapacity and upon your certain death.

For all the candidates' optimism and promises, hardly anyone wants any level of government to be more involved in his or her affairs. However, if you have total assets of $100,000 or more, and if you don't plan properly today, there will be increased governmental involvement. This comes in the manner of court proceedings, taxes, expenditures for long-term care, appointing guardians for minor or incapacitated children, determining who will receive your assets, and naming someone to handle all of your affairs.

While you do not know today exactly what will happen to you in the future (other than the fact that you will indeed die some day), and while you might not be sure of what provisions you will always want, you can act on the information and desires you have now. A plan, even a beginning plan, will give you assurance that matters will be handled by those people you choose, and as you would have them do it.

The politicians have given us much to think about, and we wish them well in their sincere endeavors. But, generally we can plan our circumstances much better than they can or than they will. Take matters into your own hand by creating an estate plan with MH. We can help you prevent greater government interference and increased taxation. Call today!

About Morris Hall:

At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, powers of attorney, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, insuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation. 

What Documents Do I Need and When Do I Need Them?

By | Estate Planning | No Comments

Nobody wants to think about death and incapacity. However, not thinking about these issues will not make them go away. The reality is that all adults need to consider what they would like to have happen in case these life events come along unexpectedly-and they almost always do. Here is a short guide to the types of estate planning that should be in place based on different stages in life:

Young Adult

Each adult (18 or older) should have a minimum of a property power of attorney, healthcare power of attorney, and living will. In some states, an adult should also have a mental healthcare power of attorney. These documents will facilitate the management of property and healthcare decision making should you become seriously ill and incapable of handling your affairs. Every adult should also execute at least a simple will that will designate who will receive assets should you die. You may not prefer the distribution of assets provided for in the intestacy laws of your state, which will generally distribute your assets to your parents or siblings. Some states have Statutory Will provisions which make drafting basic wills relatively easy.

Unmarried Adults in a Committed Relationship

Estate planning is particularly important for unmarried adults in committed relationships. If these individuals do not plan their estates, the law will generally not favor their partners in distributing assets or allocating decision making powers. Having at least a basic estate plan in place may be the only way to insure that a partner inherits or is able to make decisions in the case of a partner's incapacity.

Married Couples

In addition to having the minimum estate planning documents in place, a married couple should also consider financial aspects of estate planning. This would include making beneficiary designations for retirement accounts and purchasing life insurance to provide for a spouse should the other spouse die. If the couple has children, they need to make sure to designate guardians for their minor children in their wills. Failure to designate guardians may result in the appointment guardians that the couple may not agree with. A couple with children should also consider creating a living trust to manage a minor child's inheritance or to protect an adult child from poor decision making.

Wealthy Individuals or Couples

Wealthy individuals or couples should consider advanced estate planning to protect their estate from tax exposure. Advanced planning tools may include family limited liability partnerships (FLLP) to gift interests in businesses or farms to family members over time, irrevocable life insurance trusts (ILITS) to shield life insurance proceeds from estate taxes, and charitable remainder trusts (CRT) to provide current tax deductions and reduce a future taxable estate.

Elderly or Failing Health

While every adult should have their estate plans reviewed every few years, it is critical for those who are elderly or in failing health to have their estate plans reviewed. An estate plan review will ensure that an estate plan is in good order and identify any new issues that should be addressed. Reviewing healthcare documents is particularly important to ensure that the correct people will be making medical decisions and that the individual's end of life decision are clearly known. It may also be wise to make copies of these important document and supply them to the appropriate parties to ensure rapid utilization in case of emergency or sudden need.

Whatever stage of life you are in, take the time to consider what you would like to happen if you become incapacitated or die and meet with a qualified estate planning attorney to prepare the appropriate documents. At MH, we have 13 attorneys in Arizona and New Mexico to serve your needs. If you have already completed your estate planning, talk to your adult children about taking responsible actions for their own estate planning needs.

As always, we stand ready to help you.

About Morris Hall:

At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, powers of attorney, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, insuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Gifts for Minor Beneficiaries

By | Estate Planning | No Comments

I was so excited when Erin, my first child, was born this past September. I was certain then, and still am, that there has never been such a brilliant or beautiful little girl. Like any new parent, I beamed with pride, but at the same time, I was apprehensive about what her future may hold.

Being that Erin is my first child, I started thinking about the necessity of planning for her financial future. How much will college cost and how will I pay for it? What if she follows in her mother's footsteps and decides to go to graduate school? What if Erin needs help with a down payment on her first home? It wasn't long before I found my head swimming. These issues that I had discussed time and time again with my estate planning clients suddenly became much more real and personal.

I know that by planning ahead, funds may be set aside now to be used in the future to pay for college tuition, start a nest egg, or pay for a down payment on a first home. For 2012, a person may give up to $13,000 to as many individuals as the person chooses without requiring the filing of a gift tax return. This means that a parent or grandparent may gift $13,000 to each of their children or grandchildren this year without paying any gift tax! Because funds are being given to a minor beneficiary, the strategy used to gift the funds is of utmost importance. Prior to making any financial gifts to a minor beneficiary, you should meet with an MH Estate Planning attorney to ensure your objectives are met.

Unfortunately some individuals do not understand that planning must take place before the gifts occur. Under Arizona law, a minor beneficiary is restricted as to how much money can be in their name outright. If a minor beneficiary receives too much money, the Probate Court will get involved by appointing a Conservator to manage the minor beneficiary's financial affairs. This person, who may or may not be familiar with the minor beneficiary, must report to the court every year until the funds are depleted or the minor turns 18. Conservatorships are time intensive and have extensive expenses associated with them.

A common strategy to transfer wealth is to create a Custodial Account with a financial institution for the minor beneficiary in which funds may be directly deposited. With this type of account, someone other than the minor beneficiary (such as a parent or grandparent) is the custodian of the account until the minor beneficiary turns 18 or 21 depending on State law. Prior to obtaining the requisite age, the custodian may use the funds for the benefit of the minor beneficiary. Families should be careful when using this strategy as the custodian must give control of the account to the beneficiary once the beneficiary reaches the prescribed age of 18 or 21. Once the beneficiary gains control, they have no restrictions on the use of the funds. Rather than use the funds to pay for educational expenses, a beneficiary could use the funds to take a trip around the world!

Yet another strategy is using a 529 Plan. These types of plans allow for funds to be used to pay for post-secondary schooling. Some plans allow for funds to be withdrawn to purchase school equipment, such as a new laptop, while others restrict the use to tuition only. If a family wants the money to be used for more than school related expenses, this type of strategy should not be used.

The most flexible and comprehensive planning strategy is to use an Irrevocable Trust with Crummey powers. The creator of the trust determines who will manage the funds, how and when the funds will be used and when, if ever, the beneficiary may take control of the funds. The creator may build incentives for beneficiaries or restrictions on the use of funds. If the creator chooses, the trust may be set up so that a beneficiary receives a distribution of $10,000 for obtaining a Bachelor's degree from an accredited college or university, or may restrict access to the funds if the beneficiary is suffering from substance abuse. There is no other strategy that provides for such customization. In my case, I do not know if Erin will need assistance paying for college or if she will be financially responsible at age 21, therefore I see the flexibility and customization of an Irrevocable Trust as being the best planning option available.

If you are thinking of planning for a minor beneficiary's financial future, please call us for a free consultation in which we can identify which strategy best meets your needs.

Phoenix Attorney, Estate PlanningContributed by MH attorney Katherine O'Connell 

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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