Archive for the ‘Estate Planning’ Category

Retirees, Turn Your Passion Into a Business

More seniors are venturing into the start-up world. Learn how you can launch your own business in retirement.

By Eleanor Laise, From Kiplinger’s Retirement Report, July 2015
For a growing number of seniors, retirement means business—start-up business, to be precise. Starting a business in retirement can be a way to pursue a passion, enjoy an intellectual challenge or simply boost your income. Perhaps you’ve done some consulting as a side gig and want to expand the business. Or maybe you have been downsized and are having trouble finding a new job.

If you are on the brink of retirement and thinking of launching a business, “your age can be a very positive factor,” says Ellen Thrasher, who recently retired as director of the U.S. Small Business Administration’s Office of Entrepreneurship Education. With a wealth of work experience and good-sized nest eggs, many seniors are well positioned to succeed as entrepreneurs.

People age 55 to 64 accounted for 26% of all new entrepreneurs last year, up from 23% in 2013 and 15% in 1996, according to the Ewing Marion Kauffman Foundation. More and more people want or need to continue working into their later years and they’re saying, “I don’t mind working longer, but I want to do it on my terms,” says Michele Markey, vice-president of Kauffman FastTrac, which provides training programs for entrepreneurs.

But older entrepreneurs also face unique challenges. Because they don’t have decades to recover from a small business going bust, older entrepreneurs must be particularly vigilant about minimizing risks. They should keep a tight rein on start-up costs, avoid heavy debt loads, research the target market and choose a business structure that will protect their retirement savings from a business meltdown. Before diving in, seniors may want to test whether they’re really cut out for the entrepreneurial life—perhaps by volunteering at a business incubator where they can help mentor younger entrepreneurs.

Some seniors stumble into the start-up world by accident—but then become hooked. Elizabeth Isele, 72, was 56 when she launched her first enterprise. She had retired from the publishing industry in New York City and moved to Maine, planning to do some editing and teaching. But when a publisher asked her to help create Web sites, Isele started researching what the Internet was all about—and realized how much seniors could benefit from it. So she launched an organization to provide computer training to seniors. “I was an accidental senior entrepreneur,” she says.

Once bitten by the entrepreneurial bug, Isele became committed to sharing her know-how with other seniors. She has since launched two new ventures focused on helping seniors launch their own businesses: eProvStudio and Senior Entrepreneurship Works. With training, seniors can “understand they’ve been thinking entrepreneurially their entire lives,” even if they’ve never started a business, Isele says.
Get educated

Your first step in exploring entrepreneurial life: Seek out training and mentoring that will help you determine whether you’re cut out to be an entrepreneur, give you feedback on your business ideas and cover some details of launching a business.

The Small Business Administration offers free online courses designed specifically for encore entrepreneurs. AARP offers online tools that help seniors assess whether entrepreneurship is a good fit for their personality and financesstartabusiness. Also check your local community college for courses on writing business plans and other small-business topics.

You can also find more in-depth training designed specifically for encore entrepreneurs. Kauffman FastTrac, for example, offers a 30-hour program for boomer entrepreneurs. The course is available through community colleges and other institutions nationwide.

SCORE, a nonprofit organization supported by the SBA, lets you connect with a small-business mentor by e-mail or participate in online workshops as well as providing in-person training and mentoring. You can also visit Small Business Development Centers or Women’s Business Centers, both overseen by the SBA. Find centers and other resources in your area.

Next, assemble a “kitchen cabinet”—a team of advisers who can give honest feedback and poke holes in your business plan. Include colleagues or acquaintances who have expertise you lack, perhaps in finance or marketing.

Choosing a business

The best businesses for older entrepreneurs are “not capital intensive,” says James Bruyette, managing director at Sullivan, Bruyette, Speros & Blayney, a wealth management firm in McLean, Va. If you launch a consulting business out of your basement, for example, you’ll likely avoid risking savings that you can’t afford to lose.

Consider your appetite for risk. While opening a jewelry store can be a roll of the dice, you may be able to sell items on eBay or Etsy with minimal risk. A franchise can also make sense for some risk-averse entrepreneurs, Markey says, since the business has already been established and there’s marketing help and other support available. Many franchises are home-based and don’t require a storefront.

Consider how much time you want to put into the business, your energy level and your medical condition. Talk to your family about whether they’re comfortable with the amount of time and money you’ll be devoting to the business.

Talk to business owners in the industry you’re considering to be sure you’re realistic about the demands of the business. Some people consider starting a bed-and-breakfast, for example, because they want to spend more time with their family, Markey says. But “the realities of the B&B don’t give you more time with your family,” she says.

When you’ve settled on your idea, write a business plan, which should include your budget, goals, marketing concepts and other details. The SBA offers a step-by-step guide to writing your plan .


What You Should Know About Your Parents’ Finances
Here’s the information you should collect from mom and dad — in case they ever need your help managing their money.
By Cameron Huddleston, Contributing Editor,
 Put this on your to-do list: Meet with your parents to create a list of their accounts and insurance policies and find out where they keep their important documents.

Why? Because someday you might have to help them handle their finances — or take over money management for them entirely as I am having to do for my mom, who has Alzheimer’s disease. It’s better to have all the information you need before mom or dad can no longer take care of their finances. Otherwise, “it’s like trying to put together a jigsaw puzzle and you don’t always have the box to see what the ultimate outcome will be,” says Greg Merlino, a financial planner and president of Ameriway Financial Services.

However, parents usually are reluctant to share their financial information with their children, Merlino says. For tips on how to start the conversation, see How to Discuss Money With Your Parents.

The information below that I am suggesting you collect is based on my experience with my mom and interviews with financial planners. With all this personal information from your parents comes great responsibility to use it only as intended. State your clear reasons for asking for the information, and live up to these assurances.

Let your parents know that, in most cases, you won’t be able to access the accounts listed below unless you have power of attorney for them. There are safeguards they can employ to prevent power of attorney abuse.

Here’s the information you should collect:

–The name of the bank they use and the type of accounts they have
–Insurance policy numbers (including Medicare) and contact information for your parents’ insurance agents
–Contact information for their mortgage company
–Retirement account numbers and contact information for account managers
–Brokerage account information
–Where their income comes from if they are retired (Social Security, pension, IRA withdrawals)
–Financial planner’s name and contact information — if they have one
–Accountant’s name and contact information — if they have one
–Lawyer’s name and contact information — if they have one
–Their doctors’ names and contact information
–A list of prescription drugs they take
–Their medical history (any drug allergies, past surgeries, etc.)

Find out …

–Whether they pay for bills through automatic debit — set up automatic bill-pay if they haven’t already
–Whether they have to pay estimated taxes throughout the year (on dividend income, for example)
–Where they keep the deed to their home
–Where they keep their tax returns
–Where they keep their insurance policies
–Where they keep their stock or bond certificates
–The combination for their home safe
–Location of lock box keys
–Their final wishes/funeral arrangements –Whether they have an updated will
–Whether they have designated anyone as their power of attorney
–Whether they have a living will

If they don’t have a will, living will or power of attorney, see tips for using online forms to draft these documents or ask them to schedule an appointment with an attorney.
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7 Signs Your Parents May Need Help With Money Tasks
Look for these red flags when you spend time with mom and dad over the holidays.
By Cameron Huddleston, Contributing Editor,

 The holidays can be a good time to assess whether aging parents are having memory issues and need help managing their finances — as well as other tasks. You might not notice many of the early signs of dementia if your only contact with your parents is by phone. But if you spend several days with them over Thanksgiving or Christmas, you should get a better picture of how they’re coping.

For example, I live in the same city as my mother, who was diagnosed with Alzheimer’s disease two years ago. Because I see her regularly, I know the extent of her decline and what she no longer is capable of doing. My sister, however, lives several states away from us. Although she talks regularly on the phone to our mom, she didn’t realize how much our mother’s mental health had deteriorated until she spent three days with her.

“A lot of times people are in denial when they start to see their parents forgetting,” says Carlo Panaccione, financial planner and president of the Navigation Group, in Redwood Shores, Cal. If your parents talk about the same things again and again on the phone or forget conversations you recently had, don’t write it off — investigate.

Here are seven things to look for if you visit your parents over the holidays. If you do notice several of them, don’t rush to conclude that your parent has dementia and that you need to take over their finances. Wait until after the holidays to share your concerns and to discuss what action should be taken (I’ll share tips on how to do this tomorrow).

Once-organized drawers are crammed full of old documents, etc. My mom used to sort all her documents in file folders. But her organizational skills slipped as her memory declined, and she started shoving bank statements and other important papers in random drawers throughout her house.

The mailbox is full of donation requests. It could be a sign that your parents are being taken advantage of if they receive donation requests on a daily basis. Even if they’ve always been generous, look for solicitations from groups to which they have no connection or from causes that are not important to them.

There’s a pile of unpaid bills. Research shows that even in the early stages of Alzheimer’s, people have trouble with simple money tasks, such as paying bills. Pay attention to whether mom and dad aren’t paying the bills even if they have the financial means to do so.

There are mistakes in their checkbooks. Unless you pull out mom’s checkbook and scrutinize while she’s sleeping, this could be hard to detect. However, you can pay attention to whether your parent is having trouble writing checks, which is a task seniors with mild Alzheimer’s scored poorly on in a recent study. Your parent might not know what the date is or where to fill in the dollar amount.

The refrigerator is filled with expired food. We’re all guilty of letting things spoil in the back of the fridge occasionally. But if you notice that your mom or dad is pouring expired milk into his or her cereal and has a refrigerator full of rancid food, there could be a problem. Also check to see if there are multiple packages of the same item, which might mean your parent is forgetting what he already has when he goes shopping.

The house is no longer clean. You should take note if your parents’ usually tidy home now has piles of dirty clothes, stacks of papers and dishes in the sink. Or your parent may be keeping the house tidy but not dusting, vacuuming, scrubbing the tub or doing any real cleaning. Difficulty completing a familiar task, such as cleaning, can be a sign of Alzheimer’s.

Reminder notes are everywhere. Plenty of us keep to-do lists. But it could be a sign that your parent is having trouble remembering if he has started posting reminders throughout his house and scrawling notes on old bills, envelopes, receipts, scraps of paper or in more than one notepad.
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How to Talk With Aging Parents About Money
The holidays can be a good time to find out if Mom or Dad needs help with their finances and to start a conversation about how you can lend a hand.
By Cameron Huddleston, Contributing Editor,

 Talking to your elderly parents about their finances isn’t a conversation most us want to have. It ranks right up thetr with talking about the birds and the bees with your kids. But if you think Mom or Dad might be having trouble managing money because of the effects of aging or dementia (see How Aging Imperils Your Finances), you need to take action. And a good time to do this is over the holidays.

I’m not suggesting that you bring up the topic as you ask Mom to pass the turkey and gravy. But if you’re going to be spending several days with your parents over Thanksgiving or Christmas, you’ll have the opportunity to look for clues that they might be having problems with money tasks and to find a way to start a conversation (possibly after the holidays) about ways you can help.

Even if your parents aren’t having trouble managing their money, you should learn as much as you can about their financial situation in case you have to help them someday. It’s better to have all the information you need before they can no longer take care of their finances. Otherwise, “it’s like trying to put together a jigsaw puzzle and you don’t always have the box to see what the ultimate outcome will be,” says Greg Merlino, a financial planner and president of Ameriway Financial Services, in Voorhees, N.J.

For starters, you need to know whether they have wills, whether they have designated anyone as their power of attorney and whether they have living wills. These documents need to be drafted while your parents still are competent. There’s plenty of other information you need to gather if you can. See What You Should Know About Your Parents’ Finances for a list.

Your parents might be reluctant to share their financial information with you, though. Even if your parents are having trouble handling their finances, don’t expect them to reach out to you for help. “Parents sometimes will go through self impoverishment so they won’t have to be a burden,” Merlino says. So here are some tips on starting the conversation and getting your parents to let you help — based on my experience with my mom, who is diagnosed with Alzheimer’s disease, and with conversations I have had with financial planners, elder-law attorneys and geriatric-care managers.

Talk about your own situation. Rather than talk about your parents’ situation, discuss your own. For example, you could say “Mom and Dad, I recently met with a lawyer to draft powers of attorney for financial and health situations so that my spouse can handle things if I’m ever in a situation in which I can’t.” Then ask your parents what protections they have in place. Or you can mention an article you’ve recently read (such as this one) about the importance of getting your parents’ personal-finance information in case they ever need help managing their money.

Use a story. Tell your parents that you’ve heard about scams targeting seniors and that you want to help protect them by going through their mail and monitoring their accounts for unusual activity. Help them get copies of their credit reports at to make sure they aren’t victims of identity theft. And put your parents on do-not-call lists. Most telemarketers will stop calling once a number has been on the National Do Not Call Registry for 31 days. You can register home and cell-phone numbers free at or by calling 888-382-1222.

Enlist the help of a third party. Your parents might be more willing to discuss their finances with you — and let you help them — if a third party suggests that they do so. So ask their doctor, accountant, financial planner or geriatric manager to speak with them about the importance of talking with their children about their financial situation and asking for help if they need it. Your parents might be more receptive if the advice comes from a professional they trust.

Offer to help lighten their load. Suggest that you take over one of their financial responsibilities, such as preparing their taxes, so that they have more time to do what they enjoy. Doing their tax return will give you insight into their sources of income, how much mortgage debt they may have and whether they’re giving away a lot of their money to charity.

Offer to help them develop a spending plan (don’t call it a budget). This will give you a chance to see how much money they have coming in and how they’re spending it. If they’re having a lot of trouble managing their finances, you’ll need to limit their access to cash. You can start by setting up automatic payments for regular bills to reduce the number of checks that need to be written. If you have access to your parents’ checking account, limit the amount of money in it by regularly transferring funds to a savings or money-market account.

If spending is out of control, consider giving your parents a secured credit card, which allows them to make a deposit that becomes their credit limit, and taking away other credit cards. If you find that your parents have been the victims of a scam or entered into a questionable financial relationship, consider putting them on a cash allowance. Tell your parents that you’re giving them a certain amount each week or month to spend as they please and that you’ll take care of the bills. And be sure to let them know that you’re doing this not because you’re trying to control them, but because you love them.

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Leave a Letter of Instruction to Your Heirs
Gathering the details about your personal finances now can spare your family a lot of aggravation later.

By Susan B. Garland, Editor, Kiplinger’s Retirement Report
August 1, 2011

 EDITOR’S NOTE: This article was originally published in the June 2011 issue of Kiplinger’s Retirement Report. To subscribe, click here.

You think you have taken care of your heirs. Your estate plan is current. The life insurance policy is paid up. And the right computer passwords can unlock all the details of your IRA, 401(k) and brokerage accounts. There’s only one thing you forgot: You haven’t told your spouse or children where to find anything.

Drawing up a letter of instruction now can spare your family a load of aggravation if you die or become suddenly incapacitated. At the very least, the letter should list all of your investment accounts, insurance policies, loans, cemetery plot records, real estate holdings, military benefits, overseas assets and even frequent-flier memberships. It should also provide the location of important documents and the names of key contacts, such as your lawyer, financial adviser and insurance agent.

Stuart Kessler, a director of J.H. Cohn, an accounting firm in New York City, provides a model letter of instruction to clients. He describes it as a “road map” for heirs. “You’d be surprised how many spouses don’t know where the wills are,” he says.

Kessler’s letter directs heirs to cancel club memberships and to call current and past employers regarding company benefits and stock options. If you’d prefer that mourners donate to a specific charity rather than send flowers, stick it in the letter.

Soon after Larry Knapp retired two years ago from Caterpillar, his wife, Janis, asked to see all of the couple’s financial records. They were stacked in piles and boxes in his home office. Knapp, 63, who lives in Eureka, Ill., says it took about 12 full days, spread over three months, to sort through everything.

Knapp placed all relevant documents in a binder that Janis and their four daughters could find easily. “I am more peaceful now,” says Knapp. “If something happens to me or to both of us, I know that someone can come in here in a painless manner without having to go through all those boxes.”

As his guide, Knapp used the Family Love Letter (, a booklet created by John Scroggin, an estate lawyer in Roswell, Ga., and Donna Pagano, a financial planner in Westlake Village, Cal.
Horror Stories of Neglect

Scroggin says detailed instructions can ensure that heirs don’t miss out on their inheritance. He recalls one client who had an insurance policy of about $500,000. The premium was paid automatically from his bank account. When he had a stroke and could no longer handle his affairs, his children terminated the bank account and transferred the funds. The policy was canceled because premiums went unpaid. “They lost all of the insurance,” he says.

Another client’s children dutifully paid his nursing-home bills for years. When he died, they discovered he had long-term-care insurance. The insurer refused to reimburse them because they had missed the claim-filing deadline.

Pagano says the exercise also serves as a reminder to update documents. For instance, you may have forgotten to change your beneficiary designations on pensions and IRAs. “Some accounts have left survivor benefits to a previous spouse,” she says.

Also include funeral instructions and information you would like in your obituary, says Wynne Whitman, an estate lawyer for Schenck, Price, Smith & King, in Florham Park, N.J. Note if you already paid for your funeral and whether you’d like to be buried or cremated. Record preferences for music and speakers.

Whitman says the letter should be kept in an “important paper drawer” at home. Let your family know where it is. “People need to be able to get to the letter of instruction quickly,” she says.

Make sure to note the location of any items you may have hidden. Whitman recalls one family whose relative had secreted away the sterling. “It was hidden behind the furnace,” she says. “They had to use a metal detector to find it.”

8 Smart Estate Planning Steps to Die the Right Way
Excuse #1: You’re not going to die.
Excuse #2: You’ve been too busy.
Excuse #3: You can’t stand thinking about a future that doesn’t include you.

By Jane Bennett Clark, Senior Associate Editor
Pat Mertz Esswein, Associate Editor
Lisa Gerstner, Staff Writer
From Kiplinger’s Personal Finance magazine, January 2012

 If you’re coming up with these or other reasons for not planning for death, you’re in good — if not smart — company.
Just over one-third of Americans have a will, and fewer than half have any estate-planning documents at all, according to a 2011 survey conducted for “People don’t want to think about dying. They’re uncomfortable with the topic,” says Danielle Mayoras, coauthor with Andrew Mayoras of Trial & Heirs (Wise Circle, $20). “For that reason, they don’t do anything about estate planning.”

But making arrangements for your final days and beyond isn’t just about helping your family through difficult times. It also lets you designate representatives to make decisions about your care, withdraw money from your accounts to pay your bills and celebrate your existence in exactly the way you want — even if that means letting you take your last ride, to the cemetery, in a less-than-likely vehicle.

1. Write a will (put it in writing)
Die without a will and you let complete strangers decide how to split up your estate and raise your children. It’s called dying intestate, an act (or failure to act) that leaves the divvying-up process to state law. In lieu of a will, the court gives first dibs to a spouse and children, followed by other relatives. If you have no family, your property goes to the state. And unless you appoint a guardian for your minor kids in a legally executed will, their future will be determined by the court.

Don’t let those screw-ups happen. You can make out your own will for $70 or less at a do-it-yourself Web site, such as If your circumstances are at all complex, you’ll need a lawyer, who will charge about $300 to draw up a simple will and $1,000 to $3,000 for an estate plan that involves a will and a trust.

Be sure to update these documents periodically to account for major events, such as the birth of a child. If you don’t, you could create the very mess you were trying to avoid.
2. Consider life insurance (provide for basic needs)
You can skip life insurance if you have no one to support or you have enough money socked away to provide for your spouse or partner. Otherwise, you’ll need enough coverage to meet your family’s expenses when you can’t.

To figure out how much life insurance you need, estimate what it would cost to pay off your debts, such as a mortgage and car loans, and to fund savings goals, such as college for your kids. With these needs accounted for, your family may be able to live comfortably on about half of your current pretax income. Divide that amount by 5% to determine how much you’ll need. So it would take $1 million to produce $50,000 of annual income.

To calculate your total death-benefit needs, add up the amounts for paying off your debts, funding savings goals and providing annual income. But don’t take that number as gospel, says Tim Maurer, a fee-only financial planner in Hunt Valley, Md. “It can be geared up or down, depending on your situation.”

Term life insurance, which carries a fixed premium over the life of the term (usually 20 years), can be surprisingly affordable, even for large amounts. For instance, a 35-year-old male nonsmoker might pay $470 a year for a 20-year term policy carrying a $1 million death benefit.
3. Establish 3 critical end-of-life documents (delegate control)
“A lot of people think that estate planning is only for when they die,” says Danielle Mayoras, of “It’s also to take care of us during our lifetimes.” To help family members carry out your wishes if you cannot, provide them with these documents:

A durable power of attorney lets your agent manage your finances and legal affairs.

A release-of-information form gives doctors permission to share your medical records with designated representatives.

Advance directives. A durable power of attorney for health care names a representative to make medical decisions on your behalf. A living will specifies the medical treatment you do or do not want at the end of your life.

4. Avoid probate (pass it on with less mess)
To listen to some people, you’d think letting your estate go through probate was worse than death itself. Don’t take their word for it. The probate process, by which your executor settles your debts and disburses your property, could be a simple matter of filling out forms and paying a few hundred dollars in filing fees. But it could also be a months-long ordeal that ties up your estate and costs thousands of dollars in legal fees and other expenses.

Before you start fretting about the latter scenario, consider that some property isn’t subject to probate at all. Life insurance death benefits and the money in retirement accounts pass directly to your named beneficiaries, and property owned jointly with the right of survivorship — say, a house or a car — transfers automatically to the co-owner. You can also arrange for bank and other accounts to be transferable or payable on death, giving the recipient immediate access to the money.

Take enough off the plate and your estate could qualify for small-estate treatment, which is much simpler than regular probate, says Mary Randolph, author of 8 Ways to Avoid Probate (Nolo, $22). Most states offer simplified probate or waive it altogether for estates valued at $200,000 or less, depending on the jurisdiction. (Find out how your state handles probate.)

One good reason to avoid probate: privacy. Probate puts your affairs in the public record and requires that your executor notify your relatives and give claimants time to challenge your will. If you don’t want snoops looking at what you left, or your prodigal child fuming at what you didn’t leave, make other arrangements to avoid probate.

5. Set up trusts (transfer ownership)
Possessions owned solely in your own name go through probate. But if you transfer title of those possessions to a revocable living trust, naming yourself as trustee, you retain control over the assets during your lifetime and the property inside the trust goes directly to your heirs upon your death. Result: no probate, no fees, no public airing of your business.

In fact, living trusts can be a valuable tool for people who want to keep their affairs private, avoid a drawn-out probate or disinherit a family member. “It’s more difficult to challenge a trust than a will,” says Richard Durso, a certified financial planner in Philadelphia. But the arrangement requires punctilious attention to detail. Fail to retitle even one asset and you kick the estate into probate, defeating the purpose of the living trust.

A lawyer will likely charge $1,000 to $3,000 to draw up the document, and more if you have the lawyer do the retitling.

6. Divvy up your stuff
Your legacy will surely include stuff, from the kitchen broom to heirloom jewelry. A will typically leaves such “tangible personal property” (that you own without a title) to a spouse or children, leaving them to sort out who gets what. The process may not be pretty.

To head off family conflict and avoid the cost of updating your will in the future, state in your will that you have left a separate, signed list of bequests. You may revise the list at any time free, but date it in case survivors find an earlier version. You can also specify a strategy for divvying up the rest of your property. For ideas, see Who Gets Grandma’s Yellow Pie Plate? ($12.50). One option: Your executor can set up an online auction at (99 cents per 100 items). Invitees bid on items posted by your executor, with allotted credits.

If you own something you think is valuable, get an appraisal and have it updated every five years or so. (Find an appraiser at the American Society of Appraisers.) From your survivors’ point of view, an equitable distribution may have nothing to do with monetary value. Discuss your plans in advance, or better yet, give gifts now, while you can still receive the recipients’ thanks.

7. Plan your memorial (personalize your send-off) / prepay your funeral (plan, don’t prepay)
Over the past few decades, the tone of funerals has shifted. “It used to be an event where we came to mourn,” says Rick Noel, manager of Walton’s Chapel of the Valley funeral home, in Carson City, Nev. “Now it’s an event where we come to celebrate a life.” You can personalize your “party” by leaving your family with photographs, music and objects that reflect your interests to include in a service.

And you’re not limited to the usual ideas. A fire truck carried one of Noel’s clients, a firefighter, from the church to the cemetery. Another man, who collected antique cars, made his last road trip in a procession of them. In lieu of a viewing, you could request that your friends and family commemorate your life at a place you love — say, a restaurant, a beach or a park. Most states don’t require you to use a funeral home’s services.

Don’t let your carefully laid plans go to waste. If you include them in your will, your survivors may not see the instructions until it’s too late because they may not be able to get the will from your lawyer or safe-deposit box in time. Make a separate list detailing your funeral and burial wishes, and give copies to your family. Or for $12, buy a fill-in-the-blank booklet from the Funeral Consumers Alliance, which includes a checklist of legal documents plus templates for advance medical directives.

You can also store the information online. For example, at, you can fill out forms detailing your arrangements, upload photographs, music and letters to family and friends, write your obituary, and more. The site lets you notify up to six family members and friends via e-mail to carry out your wishes.

8. Choose burial or cremation
You may already have a strong sense of how and where you’d like to rest for good, based on your religious beliefs or personal preferences. If you don’t, the decision may come down to price. The average cost of a funeral, not including cemetery expenses, was $6,560 in 2009 (the most recent year for which data was available), according to the National Funeral Directors Association.

Choosing cremation could save money, depending on whether you have a viewing before the cremation and where you want the remains to be interred or scattered. A direct cremation — one that doesn’t include a visitation or funeral service — typically runs $1,500 to $1,800. You can spare your family some headaches by signing a legal authorization for your cremation in advance. Otherwise, depending on your state’s laws, each of your children may have to give consent for cremation, which could be a hassle if your family members are spread across the country or disagree about whether you should be cremated.

A burial without a viewing could also save money, but you’ll still have to factor in costs for a casket and any cemetery-related expenses, such as a plot, marker or vault. In most states, you can designate an “agent for body disposition” — a person who has legal rights to handle your final arrangements — which can override next-of-kin rules.
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Editors Note: This story was updated on 7/08.

Everything you own is considered part of your estate when you die. To grasp the importance of planning for the distribution of your worldly goods, consider all the things that influence what happens to them.

1. The role of probate

This is the procedure by which state courts validate a will’s authenticity, thereby clearing the way for the executor to collect and pay debts, pay taxes, sell property, distribute funds and carry out other necessary tasks involved with settling an estate. The process can be slow and expensive, and probate fees can absorb 3% to 7% of the estate’s assets. And if there is a “will contest,” costs will skyrocket.

Mindful of criticism and the spread of devices designed expressly to keep assets out of the grip of probate courts, most states have adopted a streamlined procedure for small estates, with informal procedures requiring little court supervision. Sometimes all that’s necessary is for the appropriate person to file an affidavit with the court and have relevant records, such as title to property, changed. Formal probate, in which major steps along the way are supervised by the court, is commonly reserved for large estates.

Not all of your estate has to go through probate. Among the items exempted from probate — but not necessarily from taxes — are life insurance payable to a named beneficiary, property left in certain kinds of trusts and assets such as homes and bank accounts held in joint tenancy with right of survivorship.

2. Joint ownership

Property jointly owned with a right of survivorship — the form that is commonly used by married couples but can be employed by any two people — automatically passes to the other owner when one owner dies. Tenancy by the entirety, another form of joint ownership, can apply only to married couples and isn’t recognized in all states. The pluses and minuses of joint ownership are discussed in detail later. For now, suffice it to say that it is an important estate-planning tool.

3. Federal estate and gift taxes

Despite all the attention given to the federal estate tax, few estates ever actually owe it. By one estimate, for example, the estates of fewer than 15,000 people who died in 2007 were large enough to trigger the much-vilified tax. For 2008, the first $2 million of an estate is tax-free, so only taxable estates larger than that have to pay the tax; the tax-free level rises to $3.5 million on January 1, 2009. Because the federal levy on taxable estates is a flat 45%, the $1.5-million increase in the exemption will save hundreds of thousands of dollars for the wealthiest who die in 2009.

As the law now stands, the estate tax is scheduled to disappear in 2010, then come back to life in 2011 with a skimpy $1-million exemption and a top rate of 55%. This will not happen. Instead, sometime in 2009 (no doubt near the end of the year), we expect Congress will approve estate-tax-reform legislation.

And we have an increasingly clear idea of what that legislation will look like because we know the positions of John McCain and Barack Obama, one of whom will almost certainly be president come January 20, 2009. Neither of the presumptive presidential candidates supports allowing the estate tax to disappear in 2010. And neither wants it to return with a vengeance in 2011.

The main points still to be negotiated are the top estate-tax rate and the exemption amount. Obama would extend 2009’s $3.5-million exemption into the future and hold the top rate at 45%. McCain favors a $5-million exemption and a 15% maximum rate. These positions give you the parameters for next year’s reform.

Under current law, married couples who leave their assets to their spouse can avoid tax on the entire estate of the first spouse to die, no matter how much it’s worth. This is called the marital deduction. But if the first spouse dies without fully using his or her exemption, the remaining amount is wasted. Both McCain and Obama support making the exemption portable. Thus, if one spouse were to die, the unused exemption would simply pass through to the survivor, effectively allowing a $7-million estate-tax exemption for a couple under Obama’s proposal, and a $10-million exemption under McCain’s plan. (Couples can effectively double their exemption now, but doing so often demands complex estate planning. Making the exemption portable would greatly simplify their financial planning.)

If your estate is likely to approach or surpass the taxable level, one way to reduce the estate-tax hit is to give away assets before you die. You can give away up to $12,000 a year to as many recipients as you wish without incurring what’s called a gift tax. (For married couples, the limit is $24,000 per recipient.) The gift tax is designed to prevent people from giving away too much of their wealth to prospective heirs and thus escaping the estate tax entirely. Current law allows you to give away up to $1 million during your lifetime tax-free, above and beyond those $12,000 annual tax-free gifts.

There is no limit on gifts between spouses and no limit on the marital deduction described above. This means that, with proper estate planning, the marital deduction and the estate-tax exclusion can be used to pass estates of any size from one spouse to the other without incurring federal estate tax. To make sure that you take full advantage of this opportunity and to minimize estate taxes upon the death of the second spouse, consult with an experienced estate lawyer familiar with the laws of your state.

4. State inheritance taxes

Until 2005, all 50 states and the District of Columbia had an estate tax, too: a so-called pickup tax, which applied only to estates owing the federal tax. The pickup tax didn’t actually increase the amount an estate owed but simply used a tax credit to channel revenue to your state rather than to the federal treasury. In 2005, though, the federal credit disappeared and so did the state’s pickup tax. So far, about 20 states have changed their laws to impose an estate tax, sometimes on estates small enough to avoid the federal levy.

Eight states–Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania and Tennessee–also levy an inheritance tax, which is paid by the beneficiary rather than the estate. In all states, transfers of assets to a spouse are exempt from the tax. In some states, transfers to children and close relatives are also exempt.

Adapted from Kiplinger’s Practical Guide to Your Money, by the editors of Kiplinger’s Personal Finance magazine (Kaplan Publishing. Copyright 2005 The Kiplinger Washington Editors, Inc.) Available wherever books are sold or direct at

Editors Note: This story was updated on 7/08

Writing a will is a sobering act that’s easy to put off, which is probably why so many of us never get around to it. But consider for a moment what might happen if you don’t leave clear instructions for the distribution of your property after you’re gone.

If you die without a valid will, your state will supply a ready-made one that has been devised by its legislature. Like a ready-made suit, it may fit — and it may not. The possibilities for trouble when you leave no will are nearly endless. A hostile relative might be able to acquire a share of your estate, for example, or a relative who is already well fixed might take legal precedence over needier kin.

So you should have a carefully written will. This is not a time to take shortcuts in the hope of saving a few bucks. It makes sense to pay a competent lawyer a reasonable fee to write a document that will lay out your wishes and stand up later to scrutiny by the probate court, your beneficiaries and anyone you choose not to make a beneficiary. Getting a good will also takes some thinking on your part. Will-writing kits, on paper or computers, can help you focus your thinking and get ready to meet with the lawyer. A software program that can help is Quicken WillMaker Plus by Nolo (on sale for $39.99).

Here are six steps to take when crafting your will:

1. Size up your estate. Start by drawing up a list of your assets — real estate, bank accounts, stocks, bonds, cars, boats, life insurance, profit-sharing and pension funds, business holdings, money owed to you, and the like. See How Large is Your Estate for more info.

2. Protect the children. If you have minor children, you’ll have to decide who you want to take care of them if you and your spouse both die. This involves setting up a guardianship, a task that has two principal functions. The first is to provide for the proper care of the children until they reach the age of majority. The second is to manage the money and property you leave to the children and distribute it to them as you would wish.

The same person could fill both roles, but the “guardian of the person” can be different from the “guardian of the property.” Choose the former for his or her nurturing abilities and the latter for financial knowledge and money-management skills. If you’re divorced, you might be inclined to choose a separate property guardian because the surviving parent typically would get custody of your children. Name backup guardians in case your first choice dies, is incapacitated, or perhaps wants to relinquish the job after a few years.

In addition to your will, it helps to leave detailed instructions on how you want your children raised. In a letter, or even on videotape, you can spell out anything from your views on cars and part-time jobs for teenagers to your priorities on education and religion. These instructions can provide important guidance, but they aren’t binding.

3. Distribute your property. Next you’ll have to decide how you want your estate distributed. This is obvious and straightforward in many instances, such as leaving everything to your spouse, or to your children if both of you die. You needn’t account for every piece of jewelry or every stick of furniture (but do account for pets). Making specific bequests of long lists of items like that in a will can needlessly complicate matters and lead to extra costs and delays. Write these up separately and let your executor carry out your instructions.

4. Choose an executor. Be prepared to name an executor (sometimes called an administrator), whose job it will be to see to the distribution of your estate and make sure any taxes, debts, and other obligations are paid.

Choose your executor carefully. Naturally, he or she should be someone you trust — a relative, a friend, your lawyer, or anyone you feel is able to take on the responsible task of disposing of your estate. The person should be willing to do the job, so check before you name someone who might later refuse, thus forcing the court to appoint someone you might not have chosen.

A husband and wife can name each other or a mutually agreed-on person as executor for their wills. You’ll also have to choose someone who will step in as executor if for some reason your first choice can’t do it.

5. See the lawyer. For simple wills a generalist should be able to do the job at a reasonable price. If your estate is substantial, consult a lawyer who specializes in estate planning. Don’t conclude hastily that your estate is too small for you to worry about taxes. Insurance policies, company benefits, investments, and home equity could make your estate larger than you think it is.

Depending on where you live, the complexities of the document you need, and the time you’ve spent sorting things out already, the lawyer’s fee can range from as little as $300 or so for a simple will to $200 an hour for the time involved in planning a complex estate. There is no such thing as an average price.

6. Change it if you want. If your situation changes in the future, you can always amend the will. But don’t do it yourself. You could invalidate the entire document in the eyes of the court, thus undoing the good you’ve done so far. Go to the expense of having the lawyer make the changes.

Once your will is written, don’t just stuff it in a safe-deposit box. The box may be sealed after your death, making the document unavailable for a time. Perhaps you can keep it in the lawyer’s vault or safe at home with your other important papers. You may also want to give a copy to the executor or the principal beneficiary. Subject to your lawyer’s advice, consider including a letter of last instructions that will help your executor gather your affairs together and carry out your wishes.

Adapted from Kiplinger’s Practical Guide to Your Money, by the editors of Kiplinger’s Personal Finance magazine (Kaplan Publishing. Copyright 2005 The Kiplinger Washington Editors, Inc.) Available wherever books are sold or direct at

Our worksheet will help you identify your assets and liabilities, and sort out who owns what.

Although you don’t have to pay any federal estate taxes until your taxable estate exceeds $2 million, you might be surprised by all the things the government counts in getting there. ($2 million is the threshold for 2007 and 2008. It will rise to $3.5 million in 2009. It’s scheduled to disappear in 2010, but will reappear in 2011 unless the legislation is renewed.)

In the worksheet below, the ownership column is included because how you own property is pivotal to how much of its value will be included in your estate when you die. In the “value” column, include the following:

  • The full value of property of which you are the sole owner
  • Half the value of property you own jointly with your spouse with right of survivorship
  • Your share of property owned with others
  • Half the value of community property if you live in a community-property state

Also include the value of the proceeds of an insurance policy on your life if you own the policy, your vested interest in pension and profit-sharing plans, and the value of property in revocable trusts.

Cash in checking, savings, money-market accounts    
Mutual funds    
Other investments    
Real estate    
Personal property (including furniture, cars, clothing, etc.)    
Art, antiques, collectibles    
Proceeds of life insurance policies you own on your life    
Pension and profit-sharing benefits, IRAs, etc.    
Business interests    
Money owed to you    


Loans and notes    
Consumer debt    

NET ESTATE (total assets minus total liabilities):

Adapted from Kiplinger’s Practical Guide to Your Money, by the editors of Kiplinger’s Personal Finance magazine (Kaplan Publishing. Copyright 2005 The Kiplinger Washington Editors, Inc.) Available wherever books are sold or direct at


Important legislation, written by Senate President Pro Tem Darrel Steinberg (D-Sacramento), Senate Bill 1140, took effect this January and amends the Welfare and Institutions Code, and is an expansion of the rights of financially exploited elders.

Before this important legislation took effect, an elder had to prove his or her property was taken for a wrongful use or with the intent to defraud in order to fall under the legal definition of financial abuse.  There are different levels of fraud.  Over fraud is easy to identify and in some instances rectify or avoid. It is the more overt kinds of fraud, such as undue influence that causes the most harm and is often harder to prove and remedy.  In such cases, proving intent, the legal measure by which you can make someone accountable in most instances, is difficult, if not outright impossible.  This bill addresses this situation by changing the definition to add undue influence as a basis for proving financial abuse. (See Cal. Welf. &: Inst. Code § 15610.30(a)(3).)

Undue influence, as defined by Civil Code section 1575, involves taking unfair advantage of a person’s weakness of mind or the confidence that person had in the perpetrator. By including undue influence as a basis for financial abuse, California now authorizes the recovery of damages, attorneys fees, and costs and thereby provides victims with a potent tool for a faster recovery (§ 15657.5(a)).   This is a preferable remedy to the traditional remedy of rescission, which simply undoes the bad act performed on the elder person.

In addition, SB 1140 requires a perpetrator to return, upon demand, property taken from an elder who lacks capacity. Failing to do so subjects the perpetrator to remedies that reach beyond rescission: damages, attorney’s fees, and costs (§ 15657.6).   This removes the possibility that the elder person will have to deplete all their remaining assets in order to recapture or regain assets taken from them wrongfully.

Perhaps most significantly, SB 1140 changed the statutory definition of wrongful use.  Wrongful use is now defined as the taking of an elder’s property whereby the perpetrator knew or should have known that doing so would likely be harmful to the elder (§ 15610.30(b)).  This puts aggressive salespeople on notice that their interactions with the elderly are going to be scrutinized more carefully.  Caveat emptor no longer applies in most transactions involving the elderly.  A seller may be liable for damages if the seller knows or should know that the sale is likely to harm the elder.

Other changes to the law of financial abuse in SB 1140 are as follows:  expressly recognizes that a victim may recover compensatory as well as punitive damages; holds an employer vicariously liable for financial-abuse damages resulting from the wrongful conduct of an employee committed in the course and scope of employment; and provides a four-year statute of limitations that commences when the plaintiff discovers, or should discover, the facts constituting the financial abuse (§§ 15657.5 and 15657.7).

This new law is an important tool in the protection and rights of elders and should help victims of elder abuse recover from the effects of wrongdoing.

Do you suspect that someone is the victim of elder abuse?  If so, please contact the Law Offices of Daniela Lungu at (925) 558-2710 or email

Do you want a specific topic discussed in this blog? If so, please contact us at with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.




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