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For over a quarter of a century, the National Safety Council has recognized June as National Safety Month. An objective of National Safety Month is to raise public awareness of the top safety and health risks in the United States. One of the lesser-known but considerable risks Americans and their loved ones face are the financial and emotional repercussions that can accompany incapacity or death. A revocable living trust is a legal tool that can keep clients and their loved ones safe from the costs, uncertainty, and confusion that may result upon a client’s incapacity or death.
 
A Revocable Living Trust Protects the Client
Like every person, a client is at constant risk of suffering a disastrous accident or illness that may render them incapable of caring for themselves or their loved ones. Their incapacity could be temporary, or it could last until their eventual death. The total cost of incapacity, which may include lost wages and the cost of required medical care (if a client’s incapacity requires assistance with the activities of daily living such as bathing, eating or dressing), is difficult to calculate. However, it can quickly become very costly: the average cost of assisted living in the United States in 2020 was $4,300 per month.[1]
 
A revocable living trust protects clients by providing instructions for how they and their loved ones are to be financially supported during the client’s incapacity. A revocable living trust also allows clients to choose who will handle their finances when they are unable to handle them themselves. Further, there is no better time than now to put a revocable living trust in place because the trust is revocable, which means that clients can change their mind at any time and alter their trust as their life circumstances change, as long as they have mental capacity.
 
A Revocable Living Trust Protects the Client’s Loved Ones
A revocable living trust also protects a client’s loved ones. It provides specific instructions for what clients want to have happen upon their incapacity or death, which means that their loved ones will not be left guessing what they would have wanted, or worse, have to look to state law to determine who should be given the authority to handle their financial and end-of-life affairs.
 
Estate administration fees vary widely by state, but they too can be very costly. In California, for example, where probate attorney and executor fees are set by law, the attorney and executor fees to probate a home worth $800,000 could be as much as $38,000. [2] A revocable living trust, however, can avoid probate and the associated probate fees.
 
Another benefit of revocable living trusts is that they can remain private. Without the instructions contained in a revocable living trust, family members are often forced to resort to public court processes, which means that the court and other nosy individuals may be prying into the client’s very private matters.
 
Further, a revocable living trust can provide basic marital deduction planning to maximize the use of the client’s and their spouse’s estate tax exemptions so that their loved ones do not face a large estate tax burden after their death. Finally, using a revocable living trust allows the client to protect the money they leave to their loved ones from their beneficiary’s creditors.
 
A Revocable Living Trust Must Be Properly Funded to Work
In order for a revocable living trust to work, it must be properly funded, which means that the client’s property must be owned by the trust, or for certain types of property, the trust must be named as the beneficiary. If the revocable living trust is not properly funded, then a probate may be needed. Advisors play an important role in ensuring that the appropriate accounts are owned by the trust or that the beneficiary designations name the trust.
 
Because the instructions contained in a revocable living trust are so vital, it is important that they are reviewed periodically. Check in with clients to ensure that they have reviewed their document within the last year and that it still reflects their wishes and their situation. If changes are needed, make sure they contact their estate planning attorney, who can help update their revocable living trust so that it works for them and their loved ones during incapacity and at their death.
 
If you or your clients need any assistance with creating or updating a revocable living trust, please contact us, as we are happy to help.

The month of May means not only the end of the school year and the beginning of summer but also the beginning of the busiest moving season of the year. That’s why May is National Moving Month. Your clients have a lot to think about when moving: along with organizing and packing up all of their belongings, there is also starting and stopping utilities, mail forwarding, updating voter registration, and so on. While the ever-growing number of items on their moving to-do list may be overwhelming, there are three important things you can do to help any client in the process of moving: (1) make sure they know where their important documents are, (2) help them set a moving budget, and (3) continue as their advisor, or connect them to a new advisor.
 
Make Sure They Know Where Their Important Documents Are
 
In all of the chaos of moving boxes and packing tape, it is easy for things to get lost in the shuffle or even thrown out during a move. Yet certain important documents, such as birth certificates, social security cards, passports, financial statements, and estate planning documents, should not be packed up and put on the moving truck along with the client’s dishes and shoes. You can help your client keep their important documents safe and accessible during their move and ensure that these items do not get thrown out by accident.
 
One idea you can suggest to your clients is that they purchase a portable file box with an attached lid and a secure latch. Purchasing a brightly colored one can make it more easily identifiable. Then, they should place this file box in a secure and easily accessible location. If they are moving locally, a logical place might be at a family member’s or friend’s home. If they are moving a longer distance, then that place might be the trunk of their car.
 
It is also wise for them to make electronic backup copies of all of their important documents. This could take the form of taking pictures of their documents and saving them to their smartphone, a password-protected removable flash or external hard drive, or storing them in the cloud. Then they will at least have a copy of these important documents in case they cannot locate the original. You can let your client know if you, as their advisor, have also made and stored copies of any of these important documents.
 
By helping your client with this simple step in the moving process, you will save them a lot of time and headache when, for example, they are not having to run around searching through unpacked boxes for their children’s birth certificates so that they can register them for their new school.
 
Help Them Set a Moving Budget
 
One of the pressing questions associated with a move is how much it will cost. Although the final calculation of cost will depend on factors such as the size of the client’s home, the distance the client is moving, and the client’s willingness to take on DIY projects, encourage clients to reach out to you or their financial advisor to help them set a moving budget that aligns with their long-term financial goals.
           
Continue as Their Advisor or Connect Them to a New One
 
Finally, you should discuss with your client whether you will be able to continue being their advisor after their move. In situations where it is not possible to continue being their advisor, such as when a client is moving to a state where their current estate planning attorney is not licensed to practice, then the advisor can help make the client’s transition easier by connecting them with a competent attorney in their new home town.
 
For example, a will or trust created in one state should generally be valid in the client’s new home state. However, some documents, such as a financial or medical power of attorney, can be state-specific. Because estate planning laws vary by state, it is highly recommended that they have their estate planning documents reviewed to ensure their validity in the client’s new state. Their estate planning attorney can review their documents or you can connect them with an attorney in their new state who can review them.
 
If the client is married, their out-of-state move may have additional estate planning implications if they are moving to or from a community property state. Currently, there are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Moving from a community property state to a noncommunity property state (i.e., a common law state) or from a common law state to a community property state raises questions about whether community property remains or becomes community property. For example, if a couple acquires a home in California during their marriage and then moves to Nebraska and purchases a new home in Nebraska with the proceeds from the sale of their home in California, is the new Nebraska home community property? The client’s estate planning attorney can help answer these questions.
 
There is a lot to think about when moving, but it will ease the client’s burden if (1) they know where their important documents are, (2) they have a moving budget, and (3) they know they will continue to receive great advice from their advisor team after their move. If you need any assistance with a client who is moving, give us a call.

When it comes to death and what to do with a deceased’s remains, most people think of only two options: burial or cremation. However, these options are not particularly environmentally friendly. Burial, which is arguably the worst option from an environmental standpoint, uses an estimated 100,000 tons of steel, 1.5 million tons of concrete, 77,000 trees and 4.3 million gallons of embalming fluid every year.[1] Some of that 4.3 million gallons of carcinogenic embalming fluid likely leaks into the earth, polluting our water and soil. Cremation, often considered the greener option, is not much better. Some estimate that one cremation uses about as much gas and electricity as a 500-mile road trip and gives off around 250 pounds of carbon dioxide.[2] For those clients that are more environmentally minded, here are some nontraditional, eco-friendly burial ideas. An added benefit is that many of these environmentally friendly ideas are also less expensive than the traditional options.
 
Aquamation
 
Aquamation (also known as water cremation or alkaline hydrolysis) is a water-based alternative to traditional cremation. The process, which has been legalized in about twenty states, uses a solution of water and potassium hydroxide or sodium hydroxide, which is heated to a temperature of about 350 degrees Fahrenheit. At the end of the process, only the bone matter is left, which can be dried and crushed and given to the deceased’s family to do with as they please. Desmond Tutu, the Anglican archbishop, anti-apartheid leader, and environmental advocate, requested aquamation instead of cremation by fire likely because he knew that aquamation uses an estimated 90 percent less energy than cremation by fire. After the aquamation process was complete, his ashes were interred in St. George’s Cathedral in Cape Town, South Africa.
 
Mushroom Burial Suit
 
Actor Luke Perry, probably best known for his role as Dylan McKay on the Beverly Hills, 90210 TV series, was buried in a specially made biodegradable mushroom suit after his organs were donated. While this may sound like a quirky celebrity antic, the creator of the mushroom burial suit says the mushroom spores that line this special suit are trained to consume dead human tissue. Human remains contain toxins that are released into the atmosphere during cremation or through other methods of burial. Mushrooms can absorb and purify these toxins, resulting in a cleaner earth. After breaking down the human tissue, the mushrooms conduct the nutrients from the body to fungi in the soil that then pass these nutrients on to trees.
 
Green Burial
 
If a mushroom suit is not your client’s preferred method, they may want to consider a green burial. A green burial is similar to a normal burial except no embalming fluids or toxic chemicals of any kind are used. Rather than using a gas-guzzling machine to dig the grave, the green burial ground staff—or even the client’s loved ones themselves— dig the grave by hand. To allow the body to decompose in a natural way, no cement burial vault is used, and only caskets made from biodegradable materials, such as wicker, are used. Alternatively, the casket can be eliminated altogether, and the body can simply be buried in a cloth shroud. Many green burial grounds are used as animal and plant conservation sites.
 
Sea Burial
           
If your client loves the ocean, a sea burial may be perfect for them. Sea burials may be a more familiar eco-friendly option as this method has been used for centuries by Vikings, pirates, and sailors. Today, sea burials may take the form of using a water-soluble urn or submerging a modified casket down to the ocean floor. More environmentally conscious sea burials may use natural burial shrouds or mix the person’s ashes with an eco-friendly concrete that is used to construct artificial reefs that foster aquatic life.
 
Recomposition
 
Recomposition, or body composting, is the process of converting human bodies into soil using natural means. The body is placed into a container with a mixture of wood chips, straw, and other organic materials that are then exposed to heat and oxygen to accelerate the decaying process. After about thirty days, the remains will have decomposed into about a cubic yard of soil, which the client’s loved ones can use in their gardens. Unfortunately for those who want to return to Mother Earth in this way, body composting is currently legal in only three states: Colorado, Oregon, and Washington. However, more states are considering legalizing the process, and body composting may soon gain in popularity.
 
Making burial decisions for a loved one can be an emotionally stressful experience for the family members who are left behind. These nontraditional methods may not be the first thing a family considers, so if a client wants their remains disposed of in a particular way, it is important to make this preference known by having an experienced attorney prepare their estate plan. It is also important that you, as the advisor, make sure there are funds available to help ensure that their burial wishes are carried out. Creating and funding a comprehensive burial plan in advance will reduce emotional stress for the grieving family members at the time of their loved one’s death. We welcome the opportunity to partner with you to ensure that your client’s wishes for their final resting place is honored and fulfilled.

[2] Id.

We all plan for “just-in-case” scenarios. When packing for our week-long vacation, we throw in a rain jacket even though the weather forecast is sunny—just in case. When helping clients plan for the future, it is also important to consider what will happen just in case one of our clients’ loved ones becomes disabled.
 
We tend to think that disability is something that affects other people. But approximately 61 million adults in the United States live with a disability—that is one in four adults.[1] And more than one in four twenty-year-olds will become disabled before reaching retirement age.[2] Disability is unpredictable, and accidents or serious physical or mental conditions, such as cancer or mental illness, can happen to anyone at any age.
 
As helpful as it would be when advising our clients, no one has a crystal ball to see into the future. We do not know when a client will pass away, and we do not know what position a beneficiary will be in at the time of a client’s death. So even if our clients do not currently have a loved one who is disabled, it is critical not to overlook the question of what will happen if a client’s loved one becomes disabled at a future time.
 
If a loved one becomes disabled, they may need to rely on financial assistance from government programs such as Medicaid or Social Security Disability Insurance. Unfortunately, a monetary gift or inheritance may disqualify a person from receiving these public benefits. In this situation, a client’s well-meaning gift could become more of a curse than a blessing.
 
Standby Supplemental Needs Trust
To avoid the possibility that a disabled loved one will lose government benefits because they have too much money, a client may want to consider setting up a standby supplemental needs trust as part of their estate plan. The terms of a supplemental needs trust provide that the trust’s money and property are only available to “supplement” the government benefits a beneficiary may be receiving. Therefore, the trust’s money and property are not included as available resources when determining a beneficiary’s eligibility for government needs-based benefits. A “standby” supplemental needs trust does just what its name implies: the supplemental needs trust is not created automatically but is on standby and comes into existence only if a beneficiary is disabled at the time of the client’s death or, depending on the applicable state’s eligibility rules, becomes disabled at a later date but before the trust has been fully distributed. If the disabled beneficiary is receiving public assistance at the time of the client’s death, the inheritance the beneficiary receives in a properly drafted supplemental needs trust will not disqualify them from the public assistance benefits but instead can be used to supplement the benefits they are receiving from the government and enhance the beneficiary’s life.
 
When advising our clients about planning for the future, we provide great value by helping them think through the what-if scenarios. Failing to help them think through what would happen if a loved one became disabled could result in trust assets being completely consumed by a disabled beneficiary’s care instead of wisely invested and used to enhance their life. Further, such failure could be viewed as professional negligence.
 
Since no one knows what the future holds, nearly every client could benefit from including standby supplemental needs trust provisions in their estate plan. If the standby supplemental needs trust is not needed at the time of the client’s death, then the trust will not come into existence. But it does not hurt to include it—just in case.

[2] The Faces and Facts of Disability, SSA.gov, https://www.ssa.gov/disabilityfacts/facts.html (last visited Feb. 2, 2022).

February 21 is the day on which we celebrate several US presidents who made noteworthy contributions to our country. As with any discussion that involves politics, a discussion about US presidents risks generating a variety of opinions about which reasonable minds can disagree. However, politics is not the focus of this month’s newsletter. Instead, our aim is to examine a few of the important lessons we can learn from the estate planning of some of our country’s most famous political leaders. Armed with these important lessons from history, you can help your clients make better decisions for their own estate planning.
 
George Washington
Washington was arguably the most universally beloved and revered US president. Volumes have been written about this man and what he accomplished during his life. One significant achievement that few people know about is the care Washington took to ensure that his final affairs were in order and that those who relied on him were cared for to the best of his ability. Washington’s last will and testament, widely available online in its entirety, shows that he thought carefully about his final affairs and about those who depended on him; he also remembered many individuals by making very thoughtful decisions and gifts of items of personal property or specific bequests.[1]
 
It is worth mentioning that Washington had a rather nontraditional family situation and had to carefully consider how his estate should be distributed among his loved ones. At age twenty-six, Washington married a widow, Martha Custis, who had two children of her own from her previous marriage, whom they raised together. After his stepson, John Custis, died during the war from an infection, Martha and George Washington raised John’s two youngest children as their own.[2]  As a result of his blended family, Washington carefully crafted the language of his will to provide very specific bequests to each of his surviving family members to ensure that they were well cared for long after he was gone.
 
Washington provides an excellent example in the level of thought and care with which he crafted his estate planning. Even if we do not have the wealth that Washington died with, we can still be very deliberate and thoughtful when it comes to how much, and to whom, we leave our wealth and meaningful items of personal property. By spending sufficient time and effort to think about and memorialize how we want to leave our possessions to our loved ones, we can leave a real legacy that has the potential to benefit generations.
 
Thomas Jefferson
While equally as famous as George Washington, Thomas Jefferson’s financial situation was far less favorable than Washington’s upon his death. Despite being a brilliant intellectual and the principal author of the Declaration of Independence, Jefferson nevertheless struggled to manage his financial affairs during life. In addition, he was saddled with both debts inherited from his family and that he had assumed by cosigning on a loan for a friend who died prematurely. When Jefferson passed away, he still had significant debts that his family had to repay. Because Jefferson had valuable real property but very little liquid cash with which to pay his debts, his executor ultimately had to sell the family land at depressed market prices to raise enough cash to pay his debts.[3] The unfortunate result of these circumstances was that very little of Jefferson’s property was able to be passed down within his family. 
 
Many families today face similar problems with illiquid or insolvent estates. This issue arises most often when a business or farm owner has significant wealth tied up in their business or land but little cash in reserve to settle debts or pay transfer taxes at death. This can cause the families left behind to feel intense pressure to sell the business or the land at significantly less than they might otherwise be able to sell it for under better conditions in order to raise the cash necessary to pay the debts or taxes that will shortly come due.
 
Life insurance is an important estate planning tool often used to provide sufficient cash to pay a deceased individual’s debts or transfer taxes. With the proper type and amount of life insurance, and by using certain estate planning tools such as irrevocable life insurance trusts, an individual can prevent a “land rich, cash poor” situation like that experienced by Thomas Jefferson’s family.
 
Abraham Lincoln
Another well-known and beloved US president—a lawyer, no less—very surprisingly died without a will or any other type of estate planning in place. Lincoln, like so many of us, quite possibly believed that he had many more years to address this important task. His tragic murder at the hands of a political malcontent plunged Lincoln’s family into a confusing and completely unfamiliar situation as they attempted to settle his affairs with no knowledge of where to begin. His oldest son, Robert, reached out to US Supreme Court Justice David Davis to take charge of Lincoln’s affairs.[4] Justice Davis generously stepped away from his duties on the court to assist the Lincoln family with the local court process for settling Lincoln’s estate. His estate was divided between his wife and his living sons, most likely according to the default laws of the jurisdiction. However, it remains unclear whether this is how Lincoln would have wanted to see his property divided.
 
A key lesson is that no one knows when they will pass away. Even someone as important and well-versed in the law as Abraham Lincoln was caught unprepared for his untimely demise, sadly leaving others to guess what his wishes would have been with respect to his property. The family undoubtedly experienced significant distress and frustration by not having a clear understanding or plan in place for handling Lincoln’s final affairs. Had Lincoln put some basic planning such as a will or a trust in place prior to his death, perhaps he could have helped ease his family through a very challenging time when he was no longer available to them.
 
Learning from These Presidents
There is a great deal more that could be discussed and learned from the experiences of these and other US presidents as it relates to estate planning. As you discuss some of these lessons with your clients, we hope that you will be able to help them think about their own estate planning and what they might want to do differently going forward. If any of your clients have circumstances similar to those discussed above and you would like to learn more about how to craft an estate plan that is designed specifically for their unique situation, give us a call. We would be more than happy to visit with you or your clients and discuss these matters further. Until then, Happy President’s Day!

[4] Danielle and Andy Mayoras, Are You Better Prepared Than Lincoln Was?(Dec. 4, 2012), Forbes, https://www.forbes.com/sites/trialandheirs/2012/12/04/are-you-better-prepared-than-abraham-lincoln-was/?sh=44bb9da21cca.