An Online Legacy?

We’re estate planners. We sit down with each of our clients and discuss their worldly assets and how they want them distributed to their families if they die. Until last week, I had never thought about what happens to your email account if you die. I don’t know about you, but I have accumulated thousands of emails over the sixteen years I have been using the internet. Much like our ancestors’ letters are part of their legacy to us (think John Adams and Thomas Jefferson), our emails and online communications whether through Twitter, Facebook or email, are part of our legacy. I learned through a couple of stories I’ve heard recently that when someone dies, the family can have a very difficult time getting control of online accounts. Last week, I learned about a solution.

Legacy Locker is essentially an online safety deposit box, serving as a secure repository for your digital property. It lets you grant access to online assets for friends and loved ones in the event of death or disability by naming them as beneficiaries. The service came out of an experience of one of the founders, Jeremy Toeman. When his grandmother passed away at the age of 94, the family could not access her email accounts and respond to the continuing emails that she was receiving. Jeremy also had the experience of having a new child born and went through the process of doing some estate planning. While the attorney covered all of the physical assets of the family and how they should be distributed, the online assets were not covered. These two experiences led Jeremy to come up with the idea for legacylocker.com.

I think that protecting these online assets are almost as important as the rest of what we do as estate planners. Our society is moving increasingly online, and during our lifetimes, we will accumulate quite a trail of digital “life”. In order to protect that legacy and to pass it on to our families, it will be important to have a service like legacylocker.com. Oddly enough, the idea seems to be gaining some legs. I talked about legacylocker.com on our radio show on Saturday (neversettleforless.net) and on Monday, CNN had a story about Legacy Locker. I guess I scooped CNN. Anyway, we are going to be rolling out this service to our clients in the near future and I suggest you check it out at legacylocker.com.

Media Blitz!

Lots going on here at Smith Barid, LLC this month!

First, Mike and Richard were interviewed by Lyndy Brannen on the Good Morning show (WJCL ABC-22) last Tuesday. If you missed all the fun at 6:30 that morning, catch up on what you missed by clicking here. You’ll find the video clip on the far, right column of the page. Just click play and it’ll be like you were there!

Next on the agenda, Richard and Mike will be teaming with local attorneys Howard Spiva and George Lewis to bring back the popular local radio talk show “Never Settle for Less”. The show has a broad format and will NOT be a “law talk” show.

We’ll be covering a wide range of subjects and welcoming many local and national guests. The idea behind the show is to bring you information and entertainment that helps make you (even more) healthy, wealthy, and wise. Tune in to WTKS AM 1290 in Savannah each Saturday from 10am to 12pm EST beginning 3/14/09. If you’re outside our broadcast area (or are just a technophile) you can listen online here.

Finally, word on the street is that Mike has yet another television appearance coming up later this month. More on that to come…

If you’ve not already, check out our newsletter for regular updates from Smith Barid, LLC here and you won’t miss a beat.

Our Veterans

Along with about 86,000,000 of my closest friends (according to Neilsen numbers), I got out my chips & salsa, my wings & hot sauce, and my Prilosec & Rolaids last night. I sat down to watch the spectacular production that is the NFL’s championship football game.

In addition to the necessary players from each team and referee, there was a seeming cast of thousands (ok, maybe dozens) at center field for the coin toss. Tossing that coin, as I’m sure many of you saw, was the current Commander, U.S. Central Command, General David Petraeus. His participation and the always-breathtaking pass by the Blue Angels got me thinking about our men and women in harm’s way.

Wait! Don’t click away from this post yet! This is not a dissertation on the merits of the War on Terror. It is not a diatribe about our military action in Iraq or Afghanistan. Regardless of your politics, your thoughts on use of military force, or your politics – most of us can agree that we should do our best to stand by those serving in our armed forces. Part of the way we do that in our country is by providing certain benefits and services to our veterans through the Veteran’s Administration or VA.

Aid and Attendance is a part of those benefits of which many people have never heard. The VA Aid and Attendance program is for veterans and surviving spouses. It is in place to assure certain funding for these veterans and their spouses to get the assistance they need in basic, daily living activities (eating, dressing, bathing, etc.). Depending on circumstances, there may also be funds available to help these veterans and spouses who are in nursing care or assisted living facilities.

Not unlike Medicaid (another government benefits program), VA Aid and Attendance has its own set of regulations and hoops which much be jumped through to qualify. There are choices to be made and disclosures (regarding assets) which must occur properly. Also, like Medicaid, VA Aid and Attendance has certain maximum assets a person may have and still qualify.

If you or someone you love has a need for such benefits and is a veteran (or spouse of a veteran) it makes sense to speak with a professional who has knowledge in the area. Even if current asset levels are too high, there are often things an estate planning attorney can do to position those assets correctly and help the veteran and/or spouse to qualify for the benefits to which he or she is entitled.

From all of us at Smith Barid, LLC, we offer our sincere thanks to those who have served, and those who are serving, our country in our armed forces.

Helping Your Children Meet Their Promise

As a parent of young children (two toddlers and a new baby on the way), one of the big concerns for me is how are we going to pay for their education.  I don’t know about you, but when I went to college (class of 93) and lawschool (class of 96), tuition did not equal the GDP of a developed nation.  It certainly wasn’t cheap, but it was attainable for your average middle class American family.  I’m not so sure that will be the case for our kids.  

If you want to see a projection of what it will cost for your kids, take a look at www.finaid.org.  This link will take you to a calculator where you can project tuition costs into the future.  My oldest son is four, and using the calculator and assuming he will go to a private college like I did, the cost would be $404,980.82 for four years of college.  That’s only one of my kids too.  The total for all three would be $1,436.649.91.  I don’t know about you, but that seems like an impossible number to me.

In the modern workplace, college is pretty much a requirement.  Paying for it seems like a dauting task.  I have discovered a tool reecently to help,  www.upromise.com.   UPromise is essentially a rebate program like your frequent flyer miles or cashback programs on your credit card, but instead of sending you the cashback, the rebate goes into an account for your children.  When you sign up for the site, you register your credit cards and debit cards and then as you spend money at participating businesses, money is deposited into the account.  You can also register your grocery store discount card as well as shop online through UPromise participating vendors.  UPromise also allows you to send out emails to friends and family who can then register their cards and earn money for your children as well.  The UPromise website also features information about 529 Savings Plans and Student Loans.

If your children are already in high school and nearing their matriculation, you and your family would benefit from sitting down with a college funding advisor.  There are several out there.  The only one I am personally familiar with is Fox College Funding.  If you would like to speak with one of their consultants, send an email to Seth Kovensky at info@liveoakfs.com.  Let him know that I sent you and he will discuss your options with you.

Hope, Change, and the Inauguration

Tomorrow marks an historic point in our nation’s history. Regardless of your politics, most will, in one way or another acknowledge and take part (at least in some, small way) this watershed event.

Whether you’re a news junkie, or just occasionally glance at the coverage of this event, it’s hard to miss the scope and scale of what’s happening in Washington, D.C. President Barack Obama’s inauguration tomorrow will be the most elaborate, secure, and expensive in history.

The theme of the inauguration is “A New Birth of Freedom”. We know that President Obama’s theme for his campaign and fledgling administration is “Hope and Change”. What does it take to deliver the opening of this new administration, this bridge to a place of hope and change? A massive undertaking, a show of powerful organization and funding to rival all inaugurations before.

According to news reports, “Obama will wear bullet-resistant clothing, speak behind a protective glass shield and ride in the parade in the armored Cadillac limousine, with doors and windows so thick that he probably would survive a bomb blast.” There will be 58 different agencies working on the project and the price tag to the Presidential Inaugural Committee alone will be around $45 million.

In order to create this event and set the stage for the new president to pass his legacy on to the country, it was required that his team plan not just for what’s probable, but for what’s possible.

The same is true for you as you contemplate what’s necessary to assure a smooth transition for those you love in the event you become incapacitated and when you, ultimately, pass away. It is critical that you leave as few things as possible to chance. A properly created estate plan will help you to create this kind of security for those you love.

At a bare minimum, a good basic estate plan will include a will and/or trust, a durable power of attorney, and an advance directive for health care. A carefully designed plan, set up for you by a qualified estate planning attorney, will go even further to anticipate (and smooth over) as many of life’s bumps in the road as possible.

So, whether you take time out of your day tomorrow to watch the inauguration live, or you catch the highlights on tomorrow’s evening news – let this ceremonial transition of power remind you of the responsibility you have to assure just such a seamless transition for those you love and may, someday, leave behind.

Protect Yourself and Your Family from the Costs of Long Term Care

The odds that you will end up in a nursing home before you pass away are high. Some studies show the probability of adults over the age of 65 needing a Long Term Care stay at some point during their lives nearing 50%.  Most folks, including many of the clients we meet with in our estate planning practice have no plan to minimize the burden on their estates and their families.  The truth is that people often avoid facing the reality of the Long Term Care threat, avoid taking action while they still can and avoid discussing their Long Term Care plan with their families.

The odds of falling prey to Long Term Care are staggering and the cost can be even more so.  A year in a Georgia Nursing Home averages more than $40,000.00 and promises to keep rising.  Many Americans hold the mistaken belief that Medicare and Medicare Supplemental Insurance will cover Long Term Care.  At best, Medicare covers only part or all of the first 100 days of care.  Most Long Term Care costs are paid out of your own pocket.  Once your assets have been spent down to the applicable poverty level ($2,000) you may qualify for Medicaid, a government Long Term Care program. Medicaid is a welfare program.

Against this backdrop, Long Term Care Insurance (LTCI) has become one of the fastest growing insurance products in the country. Fortunately LTCI can be designed to fit almost any budget. Most LTCI policies share some common features you should know and should be looking for:

1.  Benefit Amount: How much will the policy pay?

2.  Benefit Triggers:  When will the policy pay benefits?

3.  Inflation Protection:  Will the purchasing power increase?

4.  Level of Care: Are Custodial and Intermediate Care covered, along with Skilled Nursing Care? Is Home Health Care covered?

As with any form of insurance, the policy is only as good as the ability of the insurance company to pay your claim.  Check out the financial strength and reputation of the insurance company and seek competent legal counsel to interpret the contractual provisions of any LTCI policy before you sign on the dotted line.  As always, when considering these types of planning strategies, talking with a competent estate planning attorney before you sign any contract is a must.

Keeping it in the Family

You may be hearing daily from family, friends, financial advisors, and the talking heads of every cable news station about the turbulence of our current economy. You may feel by turns worried, confused, and uncertain.

However, with the right team on your side, you and your family will weather this storm. Instead of keeping constant vigil with the 24-hour news and financial networks – talk with you advisors. You’ll get a realistic assessment of your situation, helpful ideas about what to do right now, and a welcome respite from many in the media who look for ways to boost your tension and, thus, their ratings.

Most of the factors contributing to our current economic situation are beyond our control. There are, however, things you can do to assure that you, your family, and your assets are protected now and in the future. At Smith Barid, we find that helping people take control of the things they can control creates true peace of mind.

One of the important things you can control is what happens with the legacy you’ve worked so hard to create once it passes to your children and grandchildren. We all acknowledge that the divorce rate in our country is staggeringly high. If one of the loved ones you leave behind finds themselves in the middle of a divorce, will some or all of your hard-earned assets leave the family along with the soon-to-be ex?

Divorce (a major part of what many call Family Law) is a complex, and often difficult, process. One of our local Superior Courts (the courts in GA which handle divorce matters) just released an attorneys’ guide to property division in divorce. The memo is 14 pages, single-spaced, with 8 footnotes. This isn’t simple stuff. It is important to know, however, that the only assets divided by a judge or jury (Yes, GA still allows juries in divorce cases!) in a divorce are marital assets.

Proper planning done now can prevent your hard-earned assets from becoming marital assets of your children. That is to say, the right kind of revocable living trust or testamentary trusts will allow you to pass your legacy to the next generation without those assets being subject to division in a future divorce.

A qualified estate planning attorney will help you to seize the reins of your legacy, control what you can control, and find your bearings in this transient maelstrom of anxiety-ridden news stories.

What Everyone Should Know About Protecting Themselves in a Recession

Six Steps You Can Take to Minimize Your Risk in Uncertain Times

1 – Control What you Can Control

The tremendous turmoil in financial markets and financial institutions has caused a great deal of concern for many of us. It’s important to realize that, while we cannot control what happens in the stock market, we can control what we do with respect to our estate planning. Now, more than ever, it is vital to have a plan in place that will protect your assets, provide for your family and spare them the burden and expense of probate. These are things over which you have control. By taking control over the things in your life that you can control, you will be left with a wonderful sense of empowerment that will make the uncertainties of the world seem less scary.

2 – Turn Off the Television

This piece of advice goes along with number one. What is happening on Wall Street as the markets correct themselves is something which is out of your control. Other than doing your civic duty and voting when it comes time to, neither you nor I can do much to affect what happens in the global economy. So, why worry about it. Stressing out over whether Congress passes a bailout bill and what happens in the stock market is not going to help you make any decisions about what you need to do and adds stress unnecessarily. So do yourself a favor and turn off the TV.

3 – Insurance

Based on your age, your income and your asset level, make sure you have enough insurance in place to protect you and your family in the event of death, disability, or a long term medical condition. This is one of the most important things you can do to protect your family. This also falls under the heading of things WE CAN CONTROL. By having an appropriate amount of insurance in place, you can make sure that your family will be taken care of if something unexpected happens to you. And oh, by the way, it’s far more likely that you will suffer a disability than death anytime soon, so make sure that you have adequate disability insurance in place to maintain your lifestyle if you can’t work any longer. Almost as important for those over fifty is to make sure you have long term care insurance in place. As time goes by rates for long term care insurance will rise and now is the time when you can lock in a premium.

4 – Business Succession

If you own your own business, now is the time to make sure that there are plans in place to transition your business to the next generation. Seventy per cent (70%) of family businesses in the United States do not survive past one generation and only three per cent (3%) make it to the fourth generation. Having the right plans in place and establishing the right relationship between your family and your business are keys to long term success.

5 – Savings

Now is the time to focus on frugal living. If you do not work with a financial advisor currently, sit down with one today. The real value you can get from working with a financial planner it to take a serious look at what you are spending money on and what you can cut to increase your savings. Also, if you have any lingering differences with your spouse over money, this is the best way to get those issues out in the open and discuss them with an unbiased and neutral third party.

6 – Living Trust – FDIC Protection

Because of the increased protection your assets can have from the FDIC in a Living Trust, now may be the perfect time to set up a Living Trust for the protection of yourself and your family. Under new FDIC rules, accounts held within a Living Trust have FDIC protection of $100,000 for each beneficiary of the trust. This can greatly increase your level of protection. For more info on this here’s a link to an article on Bloomberg.

The Silver Lining in Tough Economic Times

The economy is weaker than it was in the late 1990s. Interest rates have been rising. Food and energy prices have been skyrocketing. Home prices have been falling. It is getting to the point that we don’t even want to watch the news anymore.

However, there is a silver lining behind the dark economic outlook. As home prices fall and interest rates rise, one estate planning strategy for persons with taxable estates becomes particularly attractive. A Qualified Personal Residence Trust or “QPRT” is a great way to get the value of your home out of your estate for estate tax purposes at a discount. You transfer your home to an irrevocable trust you set up for that purpose. You retain all rights in the home for a period of years, which you select. After the expiration of the period, you can continue to live there by paying rent to the trust (which further helps diminish your taxable estate). The amount an individual can leave estate tax-free is $2 million, rising to $3.5 million in 2009, but then falling to only $1 million in 2011. If you have less than $1 million in assets, a QPRT may not be an appropriate estate planning strategy for you.

Let’s look at an example. In 2003, your home was worth $500,000. Today, it is worth $400,000. The interest rate used by the IRS was 3% in 2003. Let’s say that at the time of your transfer that interest rate has increased to 5%. Let’s further assume you are 70 years old and keep a retained interest for 8 years and then pay rent. The actuarial value of the remainder interest gifted to your kids in 2003 would have been approximately $292,000. If you did that same transaction in today’s environment with the home at $400,000 and the interest rate at 5%, the value of the gifted interest would be less than $200,000. That’s about a 31.5% reduction in the value of the gifted interest. Let’s say your home goes up in value to $800,000. You will have gotten the whole thing out of your estate for a value of less than $200,000! This preserves more of the amount that can pass estate tax-free to be used for your other assets.

As you can see, this is a great time to think about this strategy. The higher the interest rates and the lower the home values, the more powerful this strategy becomes. There may not be much to be thankful about in economic news nowadays. But, this can be a great time for certain estate planning strategies like this one. A qualified attorney who focuses his or her practice in estate planning can help you design and implement a strategy for these tough economic times that meets your unique needs.

Ashes to Ashes

What happens after a person’s remains are cremated? According to a recent AP story the answer is often – nothing at all.

Cremation has risen in popularity as a means for families to deal with a loved one’s mortal remains. There’s no real surprise there, considering concerns of cost, space, etc.

What is surprising is that many of those families wind up leaving their loved one’s cremated remains with the funeral parlors or crematories indefinitely.

Apart from a sort of morbid interest, of what value is this information? Well, it brings to light the importance of making clear your intentions for all parts of your estate (including your Earthly remains). Does your family know what your wishes/instructions are for your funeral, memorial, burial/cremation, and ultimate laying to rest?

The right estate plan, drafted by the right estate planning attorney, should give you the chance to make those wishes clear. Give careful thought to how you’d like things to go. Make sure you take the opportunity to put those wishes down on paper in a way, and a place, where the right people will be sure to discover and understand them.