An often misunderstood but prevalent estate planning tool that often appears in estate planning documents is the power of appointment. Not to be confused with a power of attorney (the document that allows a living person to delegate certain powers to an agent to act on their behalf), a power of appointment can be an incredibly useful tool if used properly and knowledgeably.

A well-considered power of appointment allows a client to maintain significant flexibility in their estate plan now and in the future, even when that estate plan is otherwise considered irrevocable under the law. Though hundreds of pages of books, scholarly articles, court decisions, and tax regulations have been written on the topic of powers of appointment, this newsletter can help you counsel your clients intelligently and confidently on the topic. It can also help you recognize and identify the existence of powers of appointment in your client’s estate planning documents and call attention to them if they could have unintended negative consequences.

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What Is a Trust Protector?

Traditionally, the three roles that must be filled when setting up a trust are the settlor (also called a grantor, trustor, or trustmaker), the trustee, and the beneficiary. All three roles are necessary to create a trust that functions properly. Although it is relatively common to use trust protectors in foreign asset protection trusts, a trust protector is a fairly new role in trusts drafted in the United States for estate planning purposes. However, as the number of trusts designed to last for generations grows, estate plans need more built-in flexibility. Giving a trust protector, through the terms of the trust, certain powers over the trust, such as removing or appointing trustees, adding or removing beneficiaries, and amending or even terminating the trust, ensures that your client’s intentions for creating the trust are fulfilled despite changing law or circumstances.

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For most people, it is perfectly natural to think about estate planning only in terms of planning for death. While it is certainly important for clients to make a plan for their eventual death, if that is all they plan for, their planning will be woefully inadequate. As medical knowledge and technology have improved over the decades, so too has modern medicine’s ability to keep people alive for much longer. It is no accident that in many areas of the country, long-term care facilities such as assisted living centers and nursing homes are being built at record pace.

At first blush, staying alive longer would seem to be a good thing. And for many people, it is. However, simply living longer does not necessarily result in ideal circumstances. Longevity coupled with incapacity can be extremely challenging if a client has failed to make arrangements for someone to assist the client with financial and legal affairs during that period. On the other hand, with proper incapacity planning, your clients can rest assured knowing that their financial affairs are in good hands, out of the public eye, and being handled without the expense of lawyers, courts, and unnecessary complications.

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This year is quickly coming to a close. For many of us, December 31 cannot come soon enough, as 2020 has been anything but a walk in the park.

The first quarter of 2020 brought a worldwide pandemic. Not only did this raise concerns about everyone’s health and safety, but it also fundamentally changed the way we all live. Many people found themselves either working from home or out of work. Additionally, the pandemic created market volatility that impacted many people’s investment and retirement accounts. Along with the pandemic, many areas of the country experienced severe natural disasters such as hurricanes, earthquakes, and fires, leaving many without homes. Lastly, the 2020 presidential election proved to be just as unprecedented, with many states taking days after the election to count all of the votes. 

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As your client’s trusted advisor, you may be the first person the family turns to when a family member or loved one passes away. Although it is important for your client to contact us soon to start the process of estate or trust administration, the shock and grief of losing a loved one are often overwhelming. Sometimes, family members simply need a brief respite before addressing these legal matters.

However, there are several practical and legal considerations that the person named as the executor of the estate or trustee of the trust should address in the initial weeks following the death, prior to the administration of the estate or trust. During this stressful and emotional period, your client may forget about certain tasks which may lead to problems if left undone, and there are important legal considerations your client must heed. Here is a list you can provide to your client of some important initial steps to take:

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October is one of the most popular months for couples to tie the knot in the United States. While wedding planning most often includes tuxedos, dresses, rehearsal dinners, guest lists, and the honeymoon, an overlooked part of pending nuptials is estate planning.

For younger couples beginning a life together and getting married for the first time, estate planning may not be a terribly complicated endeavor. With minimal property and savings, simple wills, financial powers of attorney, and healthcare directives may be sufficient and prudent planning for the first years of marriage.

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Conversations with family, friends, and colleagues can sometimes wander into the topic of lawsuits, divorces, bankruptcies, and other threats that put one’s property at risk of loss to a creditor. Such conversations often leave people shaking their heads, asking what the world is coming to, and feeling vulnerable and frustrated. However, an important tool has become increasingly available to even those of modest means to protect their property from such threats at a reasonable cost and with relatively few hoops to jump through.

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COVID-19 has deeply impacted the economy in the United States and will likely continue to do so for some time. While most would agree that this pandemic is not a positive development, there are nevertheless some silver linings. One such silver lining is the significant drop in the federal funds rates. Many experts predict that these historically low rates will remain low for a while as the economy recovers. With such low rates, certain powerful estate planning strategies have become much more attractive and feasible. The following planning strategies are a few that warrant renewed consideration for affluent clients with potentially taxable estates.

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The COVID-19 pandemic has led to volatile markets, resulting in retirement accounts with much smaller balances than only a few short months ago. In response to the economic fallout stemming from the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27, 2020. The CARES Act was primarily aimed at providing quick and substantial relief to individuals and businesses affected by the economic shutdown in response to the spread of COVID-19. Several relief measures have a significant impact on clients’ ability to benefit from their retirement accounts. You can provide significant peace of mind to your clients by keeping them informed about how they can use their retirement funds now without penalties if necessary, as well as benefit from other tax relief provided by the new legislation.

The CARES Act creates new distribution options for those adversely impacted by coronavirus, expands the availability of plan loans, and waives required minimum distributions for most retirement plans for 2020.

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Many scientific studies have established that there is a wide range of benefits flowing from a positive attitude and positive thinking. At a time when many are focused on worst-case scenarios and gloomy predictions, help your clients resist the pull of negativity and embrace the beneficial results of positivity. This is not just an attempt to make them (or ourselves) feel better in spite of reality, but rather to take full advantage of the proven benefits of optimism. We can develop stronger relationships with our clients by helping them to incorporate positivity into their estate planning: They can increase not only their own wellbeing but also that of their children or other beneficiaries by creating an estate plan designed to promote their loved ones’ happiness, which in turn, will enable them to live healthier and more successful lives. Fortunately for those to whom it does not come naturally, positive thinking can be learned by surrounding themselves with positive people, deliberately engaging in positive self-talk, and living a healthy lifestyle, just to name a few common methods.

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