Reflection: Estate Planning Is Not Just For Boomers

Reflection: Estate Planning Is Not Just For Boomers

By Melinda Gustafson Gervasi

April 29, 2024

Yesterday marked 18 years since I turned in my State of Wisconsin employee badge to focus on building my own estate planning and probate legal practice.  After nearly two decades of running my own legal practice, which is focused on wills, powers of attorney and administering probate, I have learned quite a few things.  The one that impacts me the most and drives my habits outside of the office, is that fact estate planning and probate are not just for the Baby Boomers.  This fact seems to fly over too many people's heads, even that of the State Bar of Wisconsin.

Recently I found an email from the State Bar of Wisconsin in my inbox declaring April 16th as National Healthcare Decisions Day, offering the statistic that there are over 55.8 million people aged 65 or older in the United States.  The message goes on to discuss the importance of people documenting their end-of-life wishes as well as empowering loved ones to make health or financial decisions if they are alive but too sick to act.  While important, it fails to see the truth I have learned.  Estate planning decisions are for anyone 18 or older.

Illness, and sometimes death, does not patiently wait for you to complete your retirement paperwork and successfully sign up for Social Security.  Sometimes life, with all its chaos and pain, happens much, much earlier.  There is the 19 year old driving in a pouring rain that hits a curve on a country highway  crashing into a light post and dies on impact.  A 20 year old college Junior taking a prescribed medication that has an unknown side effect, discovered too late, creating a wrongful death settlement payable to grieving parents.  Pancreatic cancer may not wait until after your retirement party, but rather end your life in an efficient and swift 4 months at age 45.

I will stop there, but the list goes on.  The people who had life end far too early.  The same people who nudge me to live now and not wait for my retirement to follow my heart and travel.  Instead, we maneuver my children's school calendar and global pandemics and work with our budget so that we can travel and see a bit of this amazing world we live in.  Now, not once I retire.  

Before hitting the road we make sure our paperwork is up-to-date. Tucked away in our important papers are the key documents that make certain the chaos is minimized if I and or my husband should fall ill or pass away.  Specifically:

• Power of Attorney for Health Care
• Power of Attorney for Finances
• Authorization for Final Disposition
• A Will with a Trust for our minor children
• Letter of Instruction for our Personal Representative and the Trustee
• A one page overview of our assets along with deeds and titles to our property
• The holiday card mailing list from last year for easy access to the names and addresses of people we care about
• A pet trust for our four cats

Image by M. Gustafson Gervasi
Road Trip Memory: 4th of July Fireworks, Manhattan, Summer 2023

No one knows for certain when our time here will end, but we all know none of us are making it out alive.  Make a plan, then go out and live a glorious life.  Note that a blog is not a lawyer and should not be taken as legal advice.  Please consult with an attorney in your home state for advice specific to your situation.  Be well, and thank you for reading.  

Earth Day and The Gentle Art of Swedish Death Cleaning

Earth Day and The Gentle Art of Swedish Death Cleaning

By Melinda Gustafson Gervasi

April 22, 2024

Regular readers of my blog and recipients of my office newsletter (click here to check out past editions) know of my interest in The Gentle Art of Swedish Death Cleaning.  Fueled in part by nearly twenty years as an estate planning and probate attorney with its visibility to how hard it is to clear out a deceased loved one's possessions as well as my general interest in all things Swedish (I attribute that to my Nordic genetics), today's post melds purging our possessions with taking care of Mother Earth. In honor of Earth Day, here are three suggestions for those looking to prune back possessions:

1. Donate an item to a museum, historical society, or local theatre production company.  My great-grandfather's wedding suit was donated to the Swedish American Museum in Chicago.  There it aids research and can be used in displays.  
2. Turn it into art!  Recently my 13 year old daughter called out to me, "Mama, why do we have a framed needlepoint above the mantle that is in Swedish?"  It's been hanging since she was about 3 years old, but only recently did she realize it was unique.  I explained that it had been created by her great, great-grandmother.  I found it crumpled in the back of the linen closet at my parents' house when I was preparing the property to be sold after both of them had died.  It was lovely, and once matted and framed, makes for a highly sentimental piece of art for our home;
3. Give it away to someone who will love it!  I did that with an old wall clock that also belonged to my Swedish grandparents.  After sitting in my basement for years, not wanted by any of my other relatives, I posted it for free on my neighborhood web site.  A neighbor and friend was thrilled to give it new life. She had grown up with a father who repaired clocks, and lovingly accepted it into her home.  I smile thinking that it was enjoyed, cared for, and not destined for the landfill.

These are just three ideas on how to purge with a purpose.  What did I miss?  Please leave a comment and share your suggestions on how to care for our Earth and keep our possessions manageable.

Remember a blog is not a lawyer, it is meant to spark thought and reflection.  Please consult with an attorney in your home state for advice specific to your situation.  Thank you for reading, and be well. 

Taxes Due!

Taxes Due!

By Melinda Gustafson Gervasi

April 15, 2024

It's Tax Day; specifically, today is the day your federal and state income tax returns are due along with any payments you owe.  I recognize that not everyone finds the tax code to be as interesting as I do, so I will take this opportunity to highlight two areas in estate planning where an income tax may be due that can be a surprise:

1. People who inherit from a Traditional IRA, 401K or other "qualified plan".  Distributions made from these types of inherited assets are likely subject to income tax by the new owner; and
2. Fees paid to a Personal Representative (also called an Executor in other states) for administering an estate through probate.

The tax code is a massive piece of law that is always changing, so it is best to seek the advice of a CPA in your home state for advice.  But do keep in mind when creating or updating your estate plan, that those you leave assets to and those you give a responsibility may owe an income tax.  Knowing this may cause you to adjust what you given and who you empower.

Image by M. Gustafson Gervasi -- power lines in Panama, a visual representation of the US Tax Code

Remember that a blog is not legal advice; it is meant to spark thought and reflection.  Please consult with an attorney in your home state for advice specific to your situation.  Thank you for reading and be well!

Don't Let the Cart Get Before the Horse in Estate Planning

Don't Let the Cart Get Before the Horse in Estate Planning

By Melinda Gustafson Gervasi

April 8, 2024

The expression "don't let the cart get before the horse" comes to my mind most weeks at the office; clients approach estate planning in the wrong order. All too often a new client will say "I need a trust", usually because someone without a legal degree has told them they need one.  Gently I re-direct the clients to talk about their goals and wishes in estate planning.  Establish the wants first, then figure out which tool to use.  Sometimes it may be a trust, other times it may be a completely different estate planning device, such as a will or a transfer on death deed.

For example:

What is your goal of estate planning?

• To organize my affairs and keep things as simple as possible for my loved ones when I die, OR
• To shelter my assets for my minor children to ensure they have funds to get them to adulthood, OR
• To minimize any tax liability I may have upon my death, OR
• To control my assets after death so that a second spouse can enjoy them until s/he dies and then they pass to my children from my first marriage

Note the use of "or", having one or two goals is manageable and helps you steer the course while creating or updating an estate plan. Too many goals can cause a log jam.  

What financial situations might develop?

• Is there a mortgage on your personal residence or family cabin that needs to be paid off at your death?
• How will funeral expenses be paid?
• What income or property tax liabilities might you have to pay at the end of your life?
• Who will pay the income taxes on qualified retirement plans (your typical IRA for example)?

These are just a few factors to consider when figuring out where and how to leave your assets.

What estate planning tool should you use?

• Wills are instruments that tell a probate court where your assets that do not have a named beneficiary or a co-owner should go at your death;
• Direct transfers, meaning they go directly to the named be person(s) without going through probate include: trusts, co-ownership, named beneficiary, and TOD deeds (among others).

Not all tools are the same -- some are more complex and expensive than others.  Keep in mind that an expensive tool is not always best, it can sometimes be unwieldly and cause more harm than good.

As you think about estate planning, remember not to put the cart before the horse.  Think about your goals, seek counsel from a lawyer in your state that focuses on estate planning and probate, and move towards your goals with the best tool available.

A blog is not a substitute for a lawyer, it is meant to spark thought and reflection and is not leave advice.  Thanks for reading, and be well!

Horse with Cart, image by M. Gustafson Gervasi, Inishmore, Aran Islands, west coast of Ireland

Play Ball! Estate Planning and the Movies

Play Ball! Estate Planning and the Movies

By Melinda Gustafson Gervasi

April 1, 2024

Play Ball!  This All-American cry was heard from coast to coast last week as a new season of major league baseball started.  In a nod to this American past-time, I decided to watch the 1994 movie Little Big League which tells the tale of a 10 year old boy who inherits the Minnesota Twins from his grandfather.  Combine that storyline with today being April Fool's Day, and I am here to share what is likely obvious -- estate planning is not a joking matter. 

Too often Hollywood uses estate planning and probate scenarios to spin an entertaining story. However, too many people believe what they see on the big (and little) screen.  What makes for a good movie is not necessarily how the real world of estate planning works.  In the film the grandfather is portrayed as a very wealth man.  At this death, via video he "supplements" his will with a video message giving his favorite possession, the Minnesota Twins, to his favorite person, his grandson Billy.  A bit of a savant at the sport, Billy fires the unlikable manager and takes on the role himself.  The film is enjoyable, but a few glaring points stuck out to me:

1. Assets left to a minor are normally transferred to a trust, which is a tool to hold an asset until the minor reaches an age where they are mature enough to manage it themselves.  During the time the asset is "inside" the trust, a trustee manages the asset on behalf of the minor;
2. Using a video or recorded message is not likely a sufficient tool to amend a will (amending a will is dictated by state statues, for example it may need to be in writing and witnessed by two people); and
3. The film implied that the grandfather's attorney was a solo practitioner, which is highly unlikely for a high net worth client.  Given the complexity of business holdings and the potential for federal estate taxes, a large firm with a team of lawyers would most likely be advised.

I love stories and am a huge fan of the movies.  I just know not to take what they say about the law as the truth.  When in doubt, seek advice from a licensed attorney in your home state.  Thank you for reading and be well.