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Gratia Schoemakers

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3 Things You Must Do Once Your Divorce Is Final

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The divorce process can be long and expensive.  However, the work does not end once the divorce decree is signed. In order to ensure that your assets and estate planning wishes are carried out in light of this major life change, there are three things you must do as soon as possible.What’s Next?

Change Beneficiary Designation On Life Insurance

A life insurance policy is a contract between you and the insurance company.  You designate the beneficiary (the individual(s) or entity who will receive the proceeds upon your death) and the insurance company will pay them when you die. Because the beneficiary designation is a legally binding contract, the insurance company has to pay the individual listed as your beneficiary. If your ex-spouse is listed as the beneficiary, they will pay the funds out to him or her.  It does not matter to the insurance company if the two of you are now divorced.

Update Beneficiary Designation On Retirement Plans

Although state law may automatically revoke a designation on a retirement plan if the ex-spouse is listed, federal law states that the last named beneficiary is the one who is entitled to the funds. Depending upon what type of retirement account you have, it might be the state law that controls or the federal law.  To be on the safe side and avoid a potentially long and costly battle for your family, it is best to change the beneficiary as soon as possible.

Create or Revise Your Estate Plan

If you and your former spouse had a joint trust, you will need to have your own individual trust created to hold the assets that are now in your name only. In this new plan, you will need to think about who to name as the trustee and beneficiary. If you have minor children, you may also need to consider who is going to be the individual to manage those assets on behalf of your children. In many cases, you probably don’t want your ex-spouse in these roles.

If you do not have any estate planning documents in place, now is the perfect time to get everything in order. After going through the divorce, you probably have a good idea as to what assets you own and the value of them.  This will be very helpful as we discuss the right estate plan for you.

Your estate plan is more than just a trust.  It can include documents such as a financial power of attorney and healthcare power of attorney.  Whether you have them already or need to have ones executed, this is a crucial time to review them.  Chances are you no longer want your ex-spouse to have the authority to sign documents on your behalf or make medical decisions for you.  To avoid confusion by third parties as to who should be acting on your behalf, make sure to call us so we can update these essential documents.

We can help you cross the finish line

Divorce can be a long process.  Before taking those next steps into your new life, call us, so we can make sure that you cross the finish line with documents that are able to carry you and your wishes forward.

Contact us today.  We’re here to help.

3 Tips for Every New Homeowner

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Congratulations on the purchase of your new home.  Whether this is your first home or an upgrade/downsize, the purchasing of a home is a big event in your life.  When these major life changes occur, it is important that you are properly prepared.  Below are a few things for you to consider now that you finally have the keys to your new home!

home

1. Update Your Address

Now that you are in your new home, it is very important that you update your address with the appropriate entities.  Your local United States Postal Office will have a form you can fill out.  If you cannot make it into the post office, you can also update this information on their website.  This will assist them in forwarding your mail to you.

To ensure that you don’t miss any important tax notices or refunds, you will also want to update this information with the Internal Revenue Service, using Form 8822, and your local state tax agency.

2. Make Sure Your House Title Coordinates With Your Estate Plan

While it is still fresh in your mind, reference your new deed to see how the property is titled.  Then, you will want to reference your estate planning documents to make sure that your property has been titled properly to achieve your estate planning goals.

For example, if your previous plan had a specific provision distributing your old property, you will want to make sure that you update this provision since you no longer own the previous property.  On the other hand, if this is your first home and your estate plan includes a trust to avoid probate, you will need to make sure that your home was titled in the name of the trust and not in your name individually.

3. Check Your Life Insurance Coverage and Beneficiary Designations

Unless you were fortunate enough to pay cash for your new home, chances are you now have a large monthly mortgage expense.  In order to protect your loved ones, it is important that you check your life insurance coverage.  Should you die before paying off the mortgage, it is a good idea that you have enough life insurance to meet that obligation should you have a surviving spouse or children that will likely continue to reside in the home.  Even if they choose to not remain in the home, the life insurance can provide valuable assets during what is usually an emotionally difficult time.

This is also a great opportunity to double check your beneficiary designations.  Life changes happen so quickly that sometimes this can be overlooked.  If your designations do not match up with the rest of your estate plan, you may end up inadvertently disinheriting a family member or having the money fall directly into the hands of an individual without any guidance.

Lastly, now that you have a home and homeowner’s insurance, call your insurance agent to make sure that you are getting all of the discounts that you are entitled to.  Many insurance companies will offer discounts when you bundle services.  If you already have car insurance through a carrier and use the same company for your homeowner’s insurance, you may be entitled to a better rate that if you had both policies separately.  In addition, homeowners often get discounts that renters don’t.

We’re Here to Help

Buying a new home is a big step and we are here to help.  Give us a call and we can help make sure that your new purchase and estate planning are working together to carry out your goals.

Call or contact us today, we are here to help.

Estate Planning for Military Families

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Although Memorial Day just passed, it is important to honor those that have served our country.  This time is also a good opportunity for members of the military and their loved ones to consider setting up an – or revising an existing – estate plan.  Military families need to consider special estate-planning issues that others do not.  This is particularly true when one or more family members are deployed overseas.  Beyond this, members of the military have access to special benefits and resources.  This can become complicated and, for this reason, it is important that you seek special help if you are a military family.

Whether you are just starting in the military or you are a seasoned veteran, below are some common factors to consider for your estate planning needs.

Factors to Consider

Everyone’s estate plan should be customized to the person’s particular circumstances.  Some factors that should be considered include whether:

  • You own real property and, if so, if the real estate is located in different states;
  • You are married;
  • You have minor children, or children with special needs;
  • You have money set aside in 401(k), IRAs, or thrift savings plans;
  • You plan to give to charity; and
  • You are moving multiple times across states or to different countries.

Estate Planning Necessities

There are many benefits offered to military families that can help with estate planning.  These include:

Life insurance – an important part of an estate plan and intended for those who are financially dependent upon you, life insurance is especially important if a member of the military is heading out to a combat zone.  Active-duty members have access to low-cost life insurance for themselves and loved ones from Service Members’ Life Insurance Group.  More information can be found on the Department of Veterans Affairs website.  When examining your life insurance, work with us to make sure that the beneficiary designation works the way you expect it to.

Wills and Trusts – a last will and testament to whom and how you want your property distributed, names who will administer your estate and specifies who will care for a minor or special needs child.  A trust, on the other hand, is a separate legal entity that can hold property and assets for the benefit of one or more people or entities.  For most families, a trust-centered estate plan is a better fit, but a will can work for some families.

Other benefits for survivors – survivor benefit plans (SBP) are pension-type plans in the form of an annuity that will pay your surviving spouse and children a monthly benefit.  Likewise, dependency and indemnity compensation (D&IC) provides a monthly benefit to eligible survivors of servicemembers or veterans (1) who die while on active duty, (2) whose death is due to a service-related disease or injury or (3) who are receiving or entitled to receive VA compensation for service-related disability and are totally disabled.  When you are examining any financial services or insurance product, it’s a good idea to work with us to make sure any beneficiary designations work the way you expect and provide the maximum benefit to your family.

You Need Special Help

Members of the military often experience frequent moves, have access to lots of government benefits after service, and can be subject to some unusual tax rules.  For these reasons, estate planning for military families is more complicated than most.

You can expect an estate planning professional to assist you with setting up the following:

An estate plan has multiple objectives: to provide for your family’s financial security, ensure your property is preserved and passed on to your beneficiaries, and determine who will manage your assets upon your death, among others.  We are here to guide you through the best options available to you and your family.  Give us a call or contact us today.

Year End Estate Planning Tip #2 – Check Your Beneficiary Designations

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With the end of the year fast approaching, now is the time to fine tune your estate plan before you get caught up in the chaos of the holiday season.  One area of planning that many people overlook is their beneficiary designations.

Have You Checked Your Beneficiary Designations Lately?

Do you own any life insurance policies?  If so, have you named both primary and secondary beneficiaries for your policies?

How about retirement accounts – are any of your assets held in an IRA, 401(k), 403(b) or annuity?  Or how about a payable on death (“POD”) or a transfer on death (“TOD”) account?  If so, have you named both primary and secondary beneficiaries for these assets?

What about your vehicle – do you have it registered with a TOD beneficiary?  And your real estate – is it held under a TOD deed or beneficiary deed?

If you have gotten married or divorced, had any children or grandchildren, or any of the beneficiaries you have named have died or become incapacitated or seriously ill since you made beneficiary designations, it is time to review them all with your estate planning attorney.

Beneficiary Designations May Overrule Your Will or Trust Speaking of estate planning attorneys, has yours been given and reviewed all of your beneficiary designations?

It is critically important for your estate planning attorney to review your beneficiary designations as your life changes because your beneficiary designations may overrule or conflict with the plan you have established in your will or trust (unless your state law provides otherwise, but you should certainly not rely on this).  Also, naming your trust as a primary or secondary beneficiary can be tricky and should only be done in consultation with your estate planning attorney.

What Should You Do?

Whenever you experience a major life change (such as marriage or divorce, or a birth or death in the family) or a major financial change (such as receiving an inheritance or retiring) or are asked to make a beneficiary designation, your beneficiary designations should be reviewed by your estate planning attorney and, if necessary, updated or adjusted to insure that they conform with your estate planning goals.

If you have gone through any family or monetary changes recently and you’re not sure if you need to update your beneficiary designations, then consult with your estate planning attorney to ensure that all of your bases are covered. Call or contact us for an appointment. Our experienced attorney will be happy to strategize with you.

Will Your Revocable Living Trust Avoid Probate? It Depends.

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If you’ve set up a Revocable Living Trust, congratulations!  You’re definitely on the right track. But… you’re only halfway there. Many believe because they took the time to create a Trust, their estate will automatically avoid probate.  Unfortunately, this is a false sense of security.

The key to probate avoidance is proper asset ownership, including the full funding of your Revocable Living Trust.

What are Probate Assets?

What assets require probate?

  • Accounts and real estate titled in your sole, individual name [without a payable on death (POD) or transfer on death (TOD) designation]
  • Accounts and real estate you own as a tenant in common
  • Contract assets naming your estate as beneficiary

What Assets Avoid Probate?

What assets automatically avoid probate after you die and, therefore, do not need to be funded (or cannot be funded) into your trust?

  • Accounts and real estate owned as joint tenants with rights of survivorship
  • Accounts and real estate owned as tenants by the entirety
  • Life insurance
  • Retirement accounts, including IRAs, 401(k)s, and annuities
  • Life estate property
  • Payable on death (POD) and transfer on death (TOD) accounts and, in some states, transfer on death or beneficiary deeds

What’s the Next Step?

Ask a qualified estate planning attorney to confirm that your Revocable Living Trust is fully funded and that all assets are aligned with your estate planning.  Proper asset ownership is key to probate avoidance.