Schmuke Law Firm

Do Your Parents Have an Estate Plan?

2025-10-20T14:07:59Z

Welcome to Estate Planning Awareness Week 2025! Our first blog this week is about your parents. Read on to learn effective strategies to initiate essential conversations with your parents about wills, trusts, medical directives, and more! Do Your Parents Have an Estate Plan? If you are part of the sandwich generation—caring for both your children and your parents at the same time—it is crucial that you know whether or not your parents have an existing estate plan. While the final decisions within their estate plan rest with them, creating a comprehensive estate plan is an absolute necessity, regardless of when it is done. The thought of speaking with your parents about important and often sensitive topics like their finances and estate planning probably makes you want to run as fast as you can in the opposite direction. Nonetheless, having this conversation is the key to ensuring that your parents are able to live their golden years without financial worries and that their wishes are carried out after their death. Estate Planning for Your Parents Initiating conversations about your parents’ future, especially concerning their finances, medical care, and memorial wishes, can be challenging, but it is undeniably one of the most important discussions you can have with them. Addressing these topics sooner rather than later benefits everyone involved and ensures greater peace of mind and preparedness for the future. This crucial dialogue should encompass plans for when one or both parents pass away as well as scenarios where they become incapacitated and unable to manage their own affairs. This conversation is even more important when there are additional step-parents who need to be part of this conversation as well. To help ensure that their estate plan is comprehensive and aligns with their wishes, consider discussing the following key areas with your parents:

A team effort. Encourage your parents to compile a list of their advisors, starting with legal and financial professionals, including their contact information. This list should also include the contact information for your parents’ doctors so that whoever they nominate as their health care agent can reach them if necessary. Even if they prefer not to share the list immediately, they can create it and let you know where to find the information if the need arises.
Last will and testament or a trust. If you discover that your parents do not currently have a last will and testament (also known as a will) or revocable living trust (also known as a trust), it is probable that they do not have other essential estate planning tools, as these important tools are often created as part of a comprehensive estate plan. If they do have a will in place, confirm when it was created, who the personal representative or executor is, and where the original wills are stored. Similarly, if you discover that they have a trust, you will want to confirm who the trustee is, whether or not they have funded property and financial accounts into their trust, and where the original trust documents are stored. Stress to them that you do not need to read their will or trust in its entirety, but knowing where to find the original documents is crucial to ensuring that their wishes are carried out when the time comes.
Medical directives. While discussing your parents’ estate plan, confirm whether they have created a living will (also known as an advance directive) and a medical power of attorney. These important tools allow someone to make medical decisions on their behalf if they are unable to make or communicate their own medical decisions. If you discover that they have these tools in place, encourage them to have a conversation with their chosen agent under their medical power of attorney to ensure that the decision-maker understands your parents’ feelings and wishes about both their medical care preferences as well as their end-of-life care, such as how their medical affairs should be handled should they become incapacitated and whether or not they want to be on life support.
Insurance policies. It is important for you or your parents’ trusted decision-makers to know what insurance policies they have and where documentation is located, especially if one or both parents become incapacitated. This includes health insurance (private or Medicare), life insurance, homeowner’s insurance, auto insurance, disability insurance, and long-term care policies.
Financial, Investment, and Retirement Accounts. Encourage your parents to create a comprehensive list of their checking, savings, brokerage, mutual fund, pension, and retirement accounts. This list should include where each account is held, account numbers, and the names of any key contacts at the institution. Just as important, your parents should have a financial power of attorney in place so that a trusted individual can step in and manage these accounts if your parents are traveling, ill, injured, or otherwise unable to manage their affairs. An experienced estate planning attorney can draft this document, but it is also wise to ask whether the financial institutions involved require their own power of attorney forms, since these are often more readily accepted. Having a valid power of attorney ensures that someone can access and manage your parents’ accounts, whether checking, investment, or retirement, so that day-to-day expenses are covered and long-term financial needs are met during incapacity and beyond.

Why Estate Planning Matters Failing to put together an estate plan often leads to chaos, excessive costs and taxes, unnecessary court involvement, inadequate incapacity planning, potential hurt feelings, delays in distributing inheritances, and even unexpected outcomes after death. Fear and discomfort can keep you from having this important estate planning conversation with your parents. As estate planning attorneys, we can provide your parents with guidance and advice on what options are available to them so that their wishes are followed upon their death.

How to Make Your Inheritance Last

2024-10-25T19:11:55Z

How to Make Your Inheritance Last

Most people believe that receiving a large inheritance from a loved one would be life-changing. At least one study, however, found that about one-third of Americans who had received an inheritance eventually experienced a decrease or no change in their wealth after receiving the inheritance, meaning that they most likely spent everything they received.^[1] For baby boomers who received an inheritance of $100,000 or more, nearly one in five spent it all.^[2] If you are preparing to receive an inheritance, there are several steps you can take to ensure that your funds will last longer than a few years.

Do not make any hasty decisions. Once you receive your money, do not make any hasty decisions about what to do with it. While you are crafting your long-term financial plan, consider taking some of the following actions:

Park the funds in a safe place such as a savings account, money market account, or certificate of deposit. However, be aware that the FDIC insures these types of accounts only up to $250,000 per depositor, per insured bank, for each account ownership category.^[3]
If you do not already have an emergency fund, set one up to cover a minimum of six months of expenses. If you already have an emergency fund, consider adding additional funds to cover one year of expenses.
If you are married, you will need to decide early on if you want to keep your inheritance in your sole name in an individual account or place the funds in an account jointly owned with your spouse. This decision largely centers on whether you want to protect your inheritance from being considered a marital asset if you ever get divorced in the future. Also, it is important to know that even if you put the inheritance in your sole name, spending money from that account on joint or family expenses may render the inheritance account a marital asset, depending on the rules in your state. You should consider seeking legal counsel before you take custody of your inheritance.
If you are considering giving some of your inheritance to your children during your lifetime, you could invoke a gift tax or incur negative income tax consequences if the gift is not structured properly. You should only proceed with gifting once you understand all of the potential consequences.
If you have significant debts or liabilities, you may consider using a portion of your inheritance to pay the balance off or lower it.

Still working? Put away more toward your retirement. Some financial experts estimate that in order to comfortably retire, you should have one year's worth of salary saved by the time you are 30 years old, three times your salary by the time you are 40 years old, six times your salary by the time you are 50 years old, and eight times your salary by the time you are 60 years old.^[4] If you are working and are not contributing the maximum to your 401(k), bump up your withholding, particularly if you are not meeting your employer’s match. If your employer does not offer a 401(k), start funding an IRA. Note that if you have inherited a traditional IRA, any withdrawals you make will be included in your taxable income.

Hire a team of professional advisors. You will need a team of professionals to help you develop long-term plans to make your inheritance last. A financial advisor will help you analyze your current finances and build a solid financial foundation that includes investments, credit and debt management, college savings, and retirement planning. Your advisor can also help you look into the future and plan for long-term financial goals, such as purchasing a first or second home, purchasing an investment property, establishing funds for retirement, or starting a charitable foundation. An insurance agent will help analyze the necessary types and amounts of insurance (life, long-term care, and liability) to ensure that you and your family are protected. A tax professional will help you analyze cash flow and create a plan to minimize capital gains and other income taxes. We can help you create or update your estate plan (everyone over 18 needs a will and/or revocable trust, medical directives, and a durable financial power of attorney), decrease or eliminate estate taxes (federal and/or state), set up a gifting strategy, meet your charitable goals, create a family legacy, and protect your inheritance from creditors, predators, and lawsuits.

If your inheritance is large enough, it has the potential to last throughout your lifetime. But do not attempt to create a plan to make it last as long as possible on your own. We are here to answer any questions you have about receiving, growing, donating, protecting, and ultimately passing on your inheritance to your loved ones.

^[1] Jeff Grabmeier, Most Americans Save Only about Half of Their Inheritances, Study Finds, Ohio State News (Mar. 14, 2012), https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds---ohio-state-research-and-innovation-communications.

^[2] Id.

^[3] Deposit Insurance at a Glance, FDIC (Apr. 1, 2024), https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance. ^[4] How Much Do I Need to Retire?, Fidelity (Feb. 15, 2024), https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire.

3 Tips for Every New Homeowner

2024-10-23T15:15:29Z

3 Tips for Every New Homeowner

Congratulations on the purchase of your new home! Whether this is your first home or you are upgrading or downsizing from your current home, the purchase of a home is a big event in your life. When major life events occur, it is important that you have a plan in place to ensure that you are properly prepared for the future. Below are a few things to consider now that you finally have the keys to your new home.

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 has 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 do not miss any important tax notices or refunds, you will also want to update your address information with the Internal Revenue Service using Form 8822, as well as with your local state tax agency.

Make Sure That Your House Title Coordinates with Your Estate Plan

While it is still fresh in your mind, take a look at your new deed to determine how your new home is titled. Ideally, you had a discussion with an estate planning professional prior to purchasing the new property to determine how you would like to own your new property, whether in your name individually, jointly with a spouse, or in the name of your trust. It is important to review your current estate plan after the purchase of the home to ensure that it aligns with your estate planning goals. For example, if your plan had a specific instruction to give your prior property to someone, and the instruction references the address of your prior home, you will want to ensure that you update this provision once you no longer own the previous property to avoid confusion down the line. On the other hand, if this is your first home and your estate plan includes a trust to avoid probate, you will need to ensure that your home is titled in the name of the trust and not in your name individually. Alternatively, you could have a Beneficiary Deed prepared to add the trust as a beneficiary to the home if you are a Missouri resident. Many other states have similar tools, so be sure to check with an estate planning attorney in your state. Additionally, if you would ultimately like your property to be distributed to a specific individual or held in trust for the benefit of your loved ones (for example, your minor children), you will want to ensure that provisions are added to accomplish this.

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 monthly mortgage expense. In order to protect your loved ones, it would be prudent to prepare for the possibility of dying before you pay off your mortgage. You may want to consider whether you have enough life insurance to pay off the balance of the mortgage. This is especially important if you have a surviving spouse or children who will likely continue to reside in the home to ensure that they have sufficient funds to alleviate one of the largest monthly expenses they will probably have. Life insurance can provide valuable funds during what is usually an emotionally—and sometimes financially—difficult time. When you buy a new home, it is a great opportunity to double check your beneficiary designations. Life changes happen so quickly that sometimes updating beneficiary designations can be overlooked. If your designations do not align with the rest of your estate plan, you may end up inadvertently disinheriting a family member, having a large sum of money fall directly into the hands of an individual (for example, a young adult or minor child) without any guidelines, or having your hard-earned money and property go to someone you no longer want to benefit from your life insurance. 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 to which you are entitled. 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 than if you obtained the policies at separate carriers. In addition, homeowners often get discounts that renters do not. We Are Here to Help Buying a new home is a big step, and we are here to help you plan to protect both your loved ones and your new investment. Give us a call so we can help ensure that your new purchase and your estate plan are working together to accomplish your goals.

Reviewing Your Estate Plan after the Death of a Loved One

2024-10-22T16:07:54Z

Reviewing Your Estate Plan after the Death of a Loved One

The death of a loved one is never easy. Regardless of your relationship with the deceased (for example, a relative, significant other, or close friend), you need space and time to process and grieve your loss. Once you have had time to cope with all that has happened, you should consider updating your estate plan in light of your loved one’s death. Although your estate plan primarily focuses on what will happen if you become incapacitated (unable to make or communicate your wishes) or die, the death of a loved one can have a significant impact on your planning. If you have an estate plan, one of the first things you need to do when a loved one dies is to review the documents with the following questions in mind:

Was your deceased loved one named as a beneficiary of money or property under your will or revocable living trust? If so, do your documents address what happens to that money or property should your loved one predecease you?

One of the main objectives of establishing a will or revocable living trust is to create a plan for what will happen to the things you own at your death. If you have strong feelings about who should receive your money and property, you must name who will inherit from you and also who will inherit the money and property if your first choice dies before you. If your will or trust does not list a contingent (backup) beneficiary, the gift in question is canceled when the first-choice beneficiary passes away, and the accounts and property you wanted to leave to your now-deceased loved one become part of your general estate and will be distributed according to the remaining terms of your will or trust. This cancellation can be problematic if your beneficiary has a spouse, children, grandchildren, or other loved ones whom you would have wanted to receive the beneficiary’s inheritance instead. 2. Is a trusted decision-maker now deceased? As part of your comprehensive estate plan, you likely selected several different important decision-makers to act on your behalf if you become incapacitated (agents under your financial and medical powers of attorney and a successor trustee) or to wind up your affairs after your death (a successor trustee, personal representative, or executor). If your deceased loved one held any of these positions, make sure a backup was nominated. If not, you need to update the affected document to include a new first choice and at least one alternate. If you have already named a backup in the document, you will want to update your document to name your backup as your new first choice and remove your deceased loved one’s name to prevent confusion when a third party reviews the document. Personal representative (also known as an executor). This trusted individual, appointed in your last will and testament, is responsible for collecting all your accounts and property, paying your outstanding debts and taxes, and distributing your money and property to your named beneficiaries after your death. This person’s task is to wind up your affairs, which can be time-consuming. If your chosen personal representative dies before you and there is no named backup at the time of your death, the probate court will use your state’s laws to determine who is next in line to serve as personal representative. Co-trustee or successor trustee of your trust. Serving either with you (as co-trustee) or after you become incapacitated or die (as successor trustee), this trusted person or entity is charged with managing, investing, and distributing the money and property from your trust to you during your lifetime (if you are incapacitated or are otherwise unable to act as trustee) and to your chosen beneficiaries after your death. If your deceased loved one was a co-trustee with you, you should review your trust agreement to see what happens next. There may be a provision that either allows you to continue serving as the only trustee, names a specific person to step in and serve with you as co-trustee, or describes how to determine who your new co-trustee will be. If your deceased loved one was named as your successor trustee, nothing noticeable will happen with respect to how your trust is managed right now. However, if you become incapacitated or die and there is no successor trustee, your loved ones must look to your trust agreement for guidance on filling the vacancy. Your trust may provide that a certain number of your beneficiaries can appoint a new trustee without court involvement, or your trust might require that the court approve any new trustee. The outcome will depend on the trust’s wording and your state’s laws. Because your trust is revocable and amendable during your lifetime, it is best to update your trust to appoint a new successor trustee or change any of these provisions as needed while you still have the ability to do so. Agent under a financial power of attorney. Your agent is an individual you choose to manage your property and finances (such as communicating with your mortgage company, paying your bills, or accessing funds in your bank account for your care) on your behalf. If the person you selected is deceased and there is no named backup, no one else can act on your behalf when needed. If you become unable to manage your property and finances without appointing an agent in a financial power of attorney, your loved ones will have to go to court and have someone appointed by a judge to take care of your financial and property matters (in Missouri, this is called a Conservator). The judge will make this determination based on state law, which prioritizes a spouse or blood relative serving in this role, and the person selected may not be the person you would have chosen. Not only is this process time-consuming during a stressful time, but it can be expensive and exposes the details of your condition and family dynamics to the public. Agent under a medical power of attorney. Your agent under your medical power of attorney is typically authorized to make decisions or communicate your medical wishes in the event you are unable to do so yourself. Because this person can act only when you cannot, you may not feel an immediate need to update your medical power of attorney if your chosen agent has passed away. However, if you have an accident, become incapacitated, or are otherwise unable to communicate your medical wishes and you do not have an agent who can act for you, your loved ones must go to court to have a guardian appointed before anyone can speak on your behalf. The judge will look to the standards and guidelines within your state law to aid them in appointing the appropriate person, who may not be the person you would have chosen to make your decisions. Second, the selected person may not know your wishes about the medical care you want to receive. Guardian for your minor child. You have likely invested a lot of time and consideration in deciding who you would like to serve as the guardian of your minor children if you and the children’s other parent are unable to care for them. If the loved one you have selected has passed away, it is imperative that you update this selection. While your circumstances may vary, if your chosen guardian is unable to serve for any reason, and you have no alternate guardian nominated, the probate court will determine who will raise your child. As with other roles, the selected person may not be the one you would have chosen, and absent input from you, the judge may have limited information when making this critical decision. We Are Here to Help We understand that you are grieving the loss of a loved one. When you are ready, we are here to help you take the next step in your estate planning journey, whether you are starting, completing, or updating your estate plan. Give us a call to schedule your in-person or virtual appointment.

Estate Planning Awareness Week

2024-10-22T16:08:22Z

Life is full of changes, and keeping your estate plan current as your life evolves is essential. Here are 6 major life events that require an immediate update to your estate plan to protect yourself and your loved ones: When to Update Your Estate Plan Not sure if your plan is up-to-date? Contact us today for a comprehensive review!