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man reading newspaper

If spelling tests weren’t always your strong suit in school, fear not! Today’s legal word of the day is an easy one that’s having a momentary editorial heyday.

Ripped From the Headlines

As you probably heard, The New York Times took the highly unusual step of publishing an unsigned, anonymous op-ed entitled, “I am Part of the Resistance Inside the Trump Administration.” The person was identified only as follows:

“…. a senior official in the Trump administration whose identity is known to us and whose job would be jeopardized by its disclosure. We believe publishing this essay anonymously is the only way to deliver an important perspective to our readers.”

man with newspaper near train

Whodunnit?

The article led to a nationwide guessing game. Who is the senior official in the Trump administration who penned this “explosive” piece? Suspicion fell onto, of all people, Vice President Mike Pence. This is because the op-ed writer uses the word “lodestar,” and Pence has used this obscure word multiple times. (Pence vehemently denied he was the author, by the way.)

I don’t know who wrote the op-ed, and we may never know, but the real winner out of this news cycle is the word you never knew you needed in your vocabulary—lodestar!

So, What DOES Lodestar Mean?

Lodestar means “a star that leads or guides,” and is especially used in relation to the North Star.

timelapse of stars

Now, Let’s Talk About a Similar Kind of “Star”

At this point you’re like, “Gordon, this is a cool word I can def use in playing Scrabble, but what does it have to do with the law?”

Well, “lodestar” is a synonym and practically interchangeable with the word “polestar,” which is defined as a “directing principle; a guide.”

A court will use the term polestar like so: In this case, our polestar must be this principle . . .

Basically the court will use such-and-such as its guiding principle.

direction sign on a mountain

For example, in the law of wills, the Iowa Supreme Court stated In the Estate of Twedt that “the testator’s [maker of the will’s] intent is the polestar and if expressed must prevail.” You’ll see the same in the law of trusts, the intent of the settlor of a trust must be the polestar.

The word is also used in the law of charitable giving. The intent of the donor is the polestar which courts must follow if there are any issues. For example, suppose a donor posthumously donates $100,000 to a nonprofit, but the nonprofit no longer exists. What was the donor’s intent? Is it stated anywhere what the donor wanted to happen to the charitable funds if the nonprofit was no more? If not written, did the donor discuss the matter with anyone? To resolve any dispute involving a charitable gift, the guiding principle–the polestar–must be the donor’s intent.

Practical application of the Word Polestar

A major reason to have an estate plan is that YOU get to control your own future, rather than being controlled by outside forces or outside events. Through proper estate planning, you can be in total control of the answers to the following questions:

And if there are any questions or issues regarding your estate plan, lawyers and judges looking at your estate plan will make decisions based on YOUR intent. Your intent will be the polestar!

Don’t delay any longer – thank your lucky (North) stars you still have time to make a proper estate plan. I’d be happy to talk with you about your estate plan any time, or you can get started on organizing your important info in my free Estate Plan Questionnaire. I can be reached via email (gordon@gordonfischerlawfirm.com) or by cell (515-371-6077). I’d truly love to hear from you.

magnifying glass over book

When most people use the word “property,” they typically mean real estate or land, such as: “She owns 50 acres of property in Harrison County.” But, for estate planners, the word property has a much broader meaning. For estate planners, property is what we lawyers call a “term of art.” A term of art is a word or phrase that has a specialized, specific meaning within a particular field (such as the legal profession). Terms of art are abundant in the law; other legal terms of art you may have heard of include “double jeopardy,” “burden of proof,” and “punitive damages.”

bookcase with ladder

Two Broad Classifications

There are two broad classifications of property—real property and personal property. Real property includes land and whatever is built on the land or attached to it. It includes buildings (like houses and grain silos), fences, tile lines, and mineral rights, for example.

Personal property is best described by what it is NOT. Anything and everything that is not real property, is then personal property. It can be easiest to think of this in terms of movability. Typically real property cannot be picked up and moved. Yes, you could dig up dirt from your plot of land and move it to your neighbor’s plot of land, but you cannot actually “move” the land.  And, sure, you could argue that you could move a shed from one corner of the yard to another, but not easily.

To drive this point home, let’s think about that shed. Let’s say I want to build a shed. The lumber, tools, and paint I brought to the site to build the shed are personal property; the shed itself is real property.

Intangible and Tangible Property

Personal property is broken down into tangible property and intangible property. Tangible personal property has physical substance and can be touched, held, and felt. Examples of tangible personal property are numerous, just a few examples are furniture, vehicles, baseball cards, cars, comic books, jewelry, and art.

Intangible personal property includes assets such as bank accounts, stocks, bonds, insurance policies, and retirement benefit accounts.

Pop Quiz!

Can you classify the following as real property, tangible personal property, or intangible personal property?

Your Twitter account.

This is intangible personal property. Yes, your social media presence and digital accounts are intangible property. (Don’t forget to account for this property in your estate plan!)

Your IRA.

Again, this is intangible property.

Farmland, including its silos and fences.

Real property.

Your comic book collection.

Tangible property!

MacBook Air laptop computer.

Your computer is tangible property. But, it may contain intangible property which could well have monetary value, such as a document containing a recipe you wrote on how to bake a better apple pie, or a software you programmed.

This quiz, and overall discussion about property, sparks a big question…

What Happens to Your Property When You Die?

When you die, what happens to your property depends in large part on whether you have a will (as a part of a complete estate plan) or not. If you have a will, then your property will pass to your beneficiaries just as you intended. An exception: some intangible personal property, such as retirement and bank accounts, have beneficiary designations. Such property will pass to its intended beneficiary without a will. (Don’t forget a beneficiary designation trumps what’s written in a will, if there is any discrepancy between the two.)

If you die without a will, you are leaving it up to the Iowa intestacy laws to decide who will receive your property. Decisions as to who of your heirs at law receive your property will be made without any regard as to what you may have wanted, or may have not wanted, if you would have had a say in the matter. Long story short, it’s a good idea to put an end to the excuses and enlist a qualified estate planner to draft your personalized, quality estate plan.

Whether it’s real or personal, tangible, or intangible, act now to protect and prepare your property for the future. Get an estate plan. You can reach me most easily by email at gordon@gordonfischerlawfirm.com or call my cell, 515-371-6077. Don’t delay—write or call today.

two hands with wedding rings

Asking if your current spouse of many years can disinherit you is a question I hope you never have to ask. But, it’s an interesting query to say the least, and the answer may astound and amaze you.

It’s super uncomfortable, even for an estate planner like me, to think about my wife leaving me out of her estate plan, let alone her passing away. So, I’m going to use a hypothetical example.

Mr and Mrs sign

Scenario: John, Mary, and the Lover

Let’s say John and Mary are legally married. One sad day, Mary has a massive heart attack and dies. John is shocked to discover that Mary had a valid will he knew nothing about. Far worse, Mary specifically disowned John, said John should get absolutely nothing, and instead Mary left her entire estate to her paramour (aka lover); someone John knew nothing about!

Wow, ice cold, Mary, ice cold.

What result? I’ll give you four options, pick which you think is most correct.

  1. The “manstress” gets everything, John gets nothing.
  2. John gets everything; the lover gets nothing.
  3. The lover gets everything, but only after a lengthy, awkward, and hard-fought court battle.
  4. The lover gets some of the estate, but so does John.

Have you picked?

Answer “D” is most correct, at least under Iowa law.

You see, under Iowa law, a spouse cannot completely disinherit another spouse (assuming they have a valid marriage and they are married at the time of the first spouse’s death).

Elective Share Law

Iowa has an “elective share” law. (You can read the specific Iowa Code Section here if you’re curious. The citation is Iowa Code § 633.237).

In Iowa, a surviving spouse chooses between inheritance under a will OR elective share in the deceased spouse’s estate. Until the surviving spouse files an affidavit for claiming elective share, it will be presumed that the surviving spouse will take the inheritance under the will.

In Iowa, the elective share of the surviving spouse comprises of all of the exempt personal property and 1/3 of the value of all real estate, after the debts have been paid off and 1/3 of whatever is remaining of personal property. The surviving spouse may occupy the homestead in lieu of taking the 1/3 share of real estate of the deceased spouse.

So, Can My Spouse, Disinherit Me?

Bottom line, my wonderful wife, Monica, cannot disinherit me so long as we are legally married. Even if she (or her lawyer) writes a will that states I should get not one single penny from her estate no matter what, I would still have the option of choosing an elective share. Obviously, in this case, just like in John and Mary’s situation, the decision will be an exceedingly easy one. The will give me zero, zilch, nada, nothing—of course I am going with the elective share option.

Gordon and Monica wedding day

This is Monica & I on our wedding day!

But you know what? The elective share is a narrow exception that proves the general rule. By that, I mean the following: one of the great reasons to do proper estate planning, is that you can give what you want, to whom you want, how you want, when you want. (And if you do NOT do proper estate planning, well, then, you leave it up to the Iowa Legislature and Iowa Courts to dispose of your property).

Again, it bears repeating: estate planning allows to give what you want, to whom you want, how you want, when you want. On top of accounting for your loved one in you estate plan, you also have the wonderful opportunity to help the cause or causes that you are most passionate about through charitable bequests in your will.

Want more on this subject? Check out this Facebook live video of me explaining this “in person.”

Have more questions about you will and estate planning? Maybe how you and your spouse can achieve your collective and individual goals? How about avoiding conflicts of interest? I offer everyone a free one-hour consultation. You can reach me anytime through email at gordon@gordonfischerlawfirm.com or call my cell at 515-371-6077. I’d truly love to hear from you!

Earlier this month we launched fireworks, grilled burgers, and spent time with loved ones while celebrating the Fourth of July. America’s Independence Day stands as a surrogate of sorts for the ideals that our great nation was built on. The Fourth of July has always been a special holiday for me, and my family, as my parents immigrated to America from Germany just before the Iron Curtain came down.

Along with life, liberty, and the pursuit of happiness, I like to highlight the freedom we have to give charitably to the causes and organizations that are important to us. The most economical, tax-wise philanthropy can involve unique strategies (like “bunching” multiple years’ worth of giving into one year) and gifting non-cash assets (such as appreciated stocks). You can also consider writing charitable bequests to the tax-exempt organizations you support into your estate plan. The bottom line? There are so many different, effective charitable giving tactics you can employ to support your community. In turn, it makes America an even better place to live!

I’ve blogged about many, many tax-wise charitable tools and techniques, but here are just four (in honor of July 4th) you ought to consider (in no particular order):

Charitable Gift Annuities (CGAs)

A charitable gift annuity is a contract. More specifically, it’s a contract between a donor and a charity, whereby the donor transfers cash or property to the charity in exchange for a partial tax deduction and a lifetime stream of annual income from the charity.

Charitable Remainder Trusts (CRTs)

A charitable remainder trust is a very useful type of trust. It’s an an irrevocable trust that generates a potential income stream for you, as the donor to the CRT, or other beneficiaries, with the remainder of the donated assets going to your favorite charity or charities. I break down CRTs here.

Charitable Lead Trusts (CLTs)

A charitable lead trust is perhaps most easily defined as the inverse to the charitable remainder trust (CRT). A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries.

Simple Bequests

We may forget with all the fancy tools and techniques that are available, but let’s not forget that a simple bequest, to the charity or charities of your choice, can be incredibly powerful! In fact, even a game changer for many nonprofits. Consider adding your favorite charity to your will. And if you don’t have a will yet, that’s the first step you should take. You can download my EPQ for free to get started on building the estate plan that will help provide for your family AND favorite causes.

green plant growing

Whatever your giving goals and financial situation, I can help you structure your philanthropic gifts, so they provide maximum tax-wise benefits, while also ensuring your charitable intent is both respected and followed. Get smart about giving and contact me at Gordon@gordonfischerlawfirm.com or 515-371-6077. I offer everyone a free one-hour consultation.

book club june

Spread out your beach towel (even if it’s just in your own backyard) and crack open this month’s GoFisch Book Club pick: The Bettencourt Affair, by Tom Sancton.

Bettencourt Affair book cover

The book takes its readers on twists and turns through an all too real French soap opera of the rich, powerful, and famous. Its characters including Liliane Bettencourt, one of the richest women in the world and heiress to the L’Oreal cosmetics fortune; former President of France, Nicolas Sarkozy; an intriguing (or scam) artist; a worried (or jealous) daughter; and a whole slew of lawyers, judges, and other professionals wrapped into the web this story weaves. There’s also some interesting WWII back story that comes into play as well as political payoffs and quid pro quo. It’s a quick read and sumptuous in the surrounding luxury of private jets, islands, and Swiss bank accounts. Yet, entirely sobering when remembering that all this wealth caused the emotional heartache, numerous lawsuits, and ruined careers in its wake.

GoFisch Book Club Flyer

 

Why is this the GoFisch book club pick of the month? Despite its tabloid-esque plot, legal aspects of estate planning are plentiful throughout the life and times of the players with multiple types of trusts, a will that’s being constantly updated, transfer of long-term capital assets, questions of testator incapacitation, multiple conflicts of interest, and impressive charitable giving tools and tactics.

One of the central questions asked throughout the legal battle that ensues throughout the latter half of the 416 pages is: did one man (François-Marie Banier) take advantage of a wealthy old woman or was he simply the supportive friend and recipient of numerous unsolicited gifts. In this course of all of this, multiple other advisors, employees, and politicians get implicated in “l’affaire Bettencourt” as the courts question who did and did not unduly benefit from Bettencourt’s supposed generosity, and who may or may not have had unethical influence over her decisions. The answers to these are answered in part from the decisions of the courts, but

Also, for anyone interested in the legal systems of other countries The Bettencourt Affair offers a sort of crash course on explaining how France’s judiciary operates and how it.

As you’re reading this book consider the estate planning-related questions:

  1. What role did estate planning play in the Bettencourt Affair?
  2. Do you think Liliane Bettencourt;s estate was taken advantage of and if so, by whom?
  3. Do you believe Liliane Bettencourt was of sound mind and body in order to make the financial decisions and gifts she did? What characteristics come into play when proving incapacitation and need for guardianship or conservatorship?
  4. Just for fun…if you had the kind of wealth that the Bettencourts did, what kind of trusts would form and who would the trusts benefit? What organizations would you like to benefit from your tax-wise philanthropic efforts?
  5. What are your thoughts on the French judicial system as exemplified through this book? How does it compare to the U.S. for both the better and the worse?

It’s worth noting here that there almost an endless number of different types of trusts and an adept estate planning attorney can help their clients form a trust that fits with their estate planning, financial, and charitable giving goals.

 

coffee-book-table-word-nerd

It’s also important to remember that trusts are certainly not just for the wealthy. Indeed many regular folks like you and I can stand to benefit from creating different types of trusts. After (or before) you dive into this GoFisch Book Club pick for the month, don’t hesitate to contact Gordon Fischer Law Firm with your trust-related questions or for a consultation if a trust fits your individual needs.

Leave your thoughts on the book in the comments below and let us know if you have any estate planning or nonprofit-related book picks for the upcoming months!

xray-doctor

One of the six main parts of an estate plan that every adult Iowan should have is a health care power of attorney (POA). This legal instrument allows you to designate the person that you want to make health care decisions for you in the chance that you become incapacitated and unable to make such decisions for yourself.

Who can be my Health Care POA Representative?

The person you pick is your agent/representative for purposes of health care decision-making and should be (a) a competent legal adult; (b) someone you trust would make health care decisions that align with your best interests; and (c) someone who agrees to the role. Some people elect to have the same person be their designated proxy for both the health care and financial powers of attorney. Other folks choose two different individuals for these roles.

It is highly advised to name an alternate representative in case the person you appoint becomes unable or unwilling to act on your behalf.

The law does not allow your health care designated agent to be a health care professional providing health care to you on the date you sign the document. It also cannot be any employee of the doctor, nurse, or any hospital or health care facility providing care to you. The only exception is if that employee is a close relative.

What types of Health Care Decisions does a POA Cover?

A health care power of attorney can govern any kind of decision that is related to your health that you allow. You could, for example, limit your representative to certain types of decisions. Or, you could allow your representative to make decisions for any type of health care choice/issue that may arise. This includes decisions to give, withhold, or withdraw informed consent to any medical and surgical treatments. Other decisions could relate to psychiatric treatment, nursing care, hospitalization, treatment in a nursing home, home health care, and organ donation.

 

Assorted pills

When Would I use a Health Care POA?

A health care POA comes into play only when, in the certified and recorded opinion of your attending physician, you are unable to make health care decisions for yourself. Your named agent is then able to make decisions regarding your care, receive access to records, communicate with health care providers, and other important actions that would otherwise be off limits.

What is a Living Will?

The name of this document is bit of a misnomer. Sometimes referred to as an advanced directive, a living will is best thought of as a written declaration that informs health care providers of your desire to NOT have life-sustaining treatment continue if you are diagnosed as terminally ill or injured, are unable to communicate your choices regarding your treatment, and such treatment would simply prolong the inevitable and imminent process of dying. You may consider a living will an important part of the whole that is your health care power of attorney document

Under Iowa’s Living Will Law, a living will does not permit withholding or withdrawing food or water unless they are provided intravenously or by a feeding tube. Additionally, medication or medical procedures necessary to provide comfort or to ease pain are not considered life sustaining, and may not be withheld.

Because of the sensitive nature of the living will, before signing the document make certain the provisions included align with your philosophical and/or religious beliefs and wishes.

Important Definitions

Life-sustaining treatment” is defined as the use of medical machinery such as heart-lung machines, ventilators, tube feeding, and other medical techniques that may sustain and possibly extend your life, but which won’t, by themselves, cure your condition.

Terminal condition,” under Iowa law, is defined as an incurable or irreversible condition that without life sustaining procedures, results in death within a relatively short time or a comatose state from which there can be no recovery, to a reasonable degree of medical certainty.

In all states the determination as to whether you are in such a medical condition is determined by qualified medical professionals—typically your attending physician and at least one other medical doctor who has examined or reviewed your medical situation. The decision must be recorded in your medical records.

 

doctor stethoscope

How do I Make a Living Will?

This is one of the documents I include in the estate planning packages for my clients, if they so elect to have one. The first step, at least when working with GFLF on your estate plan, is filling out my Estate Plan Questionnaire, which is where you can choose “yes” or “no” for creating a living will.

In terms of qualifications, you must be a competent, legal adult who is age 18 or older. The declaration can be signed in the presence of two witnesses (who also must be 18 or older and should not be family members if at all possible) or a notary public. Note that health care employees responsible for your care cannot be the witnesses.

Of course, the declaration for a living will must be signed voluntarily and without coercion.

What do I do Once I Sign a Living Will?

The original living will must be given to your doctor in order for it to be acted upon. Therefore your health care designated agent should have access to the original if the time comes when it is need.

Under Iowa law, it is your responsibility (and therefore your health care proxy if you are unable or incapacitated) to provide your attending physician (the doctor who is primarily responsible for your care and treatment) with the declaration. This attending physician might not be your family doctor, but it’s smart to give a copy of the living will to your family doctor to have on file. In addition, the living will’s existence should be made known to members of your family.

What Happens if I Change my Mind About my Living Will?

A living will is revocable at any time. You may revoke the document easily by notifying your attending physician of your intent to do so. This communication of intent will then be recorded by your attending doctor as a part of your medical record. If this is the case I also recommend contacting your estate planning attorney and health care designated agent to communicate your change. Depending on what is written in your health care POA that document may need revisions or additions, which is something your estate planning attorney can facilitate.

surgeons walking down hallway

What About a Living Will Made in Another State?

This is a good question as each state has its own laws related to living wills and such decisions. A living will made in another state will be valid in Iowa to the extent that the declaration aligns with Iowa laws on the matter.

That being said, it’s best to have a current living will declared in the state you reside in and are most likely to receive care in. So, if you signed a living will while living in Colorado and then move to Iowa, it’s best to sign a new living will that is specific to Iowa’s laws. (Plus, moving across state lines is one of those big life changes that mean you should update your entire estate plan to be sure it’s valid under your new home state’s estate, property, and inheritance laws. So, you may as well update your living will while you’re at it!)

What Happens if I don’t Have a Living Will?

Without a living will stating your directives, others will be forced to decide if life-sustaining procedures will be used for you. (Typically this is a situation one does not want to place on their loved ones.) If you have a health care power of attorney, that representative will make the decisions regarding life sustaining treatments and procedures.

If you also don’t have a health care power of attorney in place, Iowa law states that the attending physicians and the first person available from the following list will make such health care decisions for you  in front of a witness:

  • A guardian, if applicable (Note that a court appointed guardian must obtain court approval before making this decision.)
  • Your spouse.
  • Your adult child (or a majority of your adult children who are available).
  • Your parent or parents.
  • Your adult sibling.

Communication is Key

Just like it’s important to discuss your estate planning decisions with your executor and family, it is equally important to discuss your health care and life-sustaining wishes with the person who will be your agent. You may also plainly state directives on your health care power of attorney form such as “I want all available organs to be donated in the event of my death.”

Review and Get Started

Whew. That was a lot of important information in one blog post. Let’s review how the two different but compatible documents of health care power of attorney and a living will:

  • Your health care power of atttorney gives a proxy your designate and trust the authority to make medical decisions for you if you are unable to make them for yourself.
  • The living will is a document specifically directing your physician that certain life-sustaining procedures should be withdrawn or withheld if you are in a terminal condition and unable to decide for yourself.

You can have a health care power of attorney document without having a living will. And, while not advised to not have a health care power of attorney document in place, you could technically have a living will without a health care power of attorney.

If you don’t have health care power of attorney or a living will in place, there’s no time like the present to make your decisions known and recorded well before the unexpected happens. Fill out my easy Estate Plan Questionnaire to get started. If you have any questions about either of these documents, don’t hesitate to contact me at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

love in lights

Valentine’s Day is coming up quick and while I think the commercialized messages of “this is love” can get a little cheesy, I’m a full supporter of a day that celebrates love. Be it love for your spouse, a celebration of the fact that you are awesome, or showing even more adoration for you furry best friend, the world could always use a little more love. In this important addition to the #PlanningForLove series, let’s talk about ways you can show love to your children through you estate plan.

I’ve discussed the importance of guardianship quite a bit on this blog. It’s important that anyone with minor children establish guardianship so that if something were to happen to you as a legal guardian that your minor children (under age 18) would be immediately placed in the care of someone you know, trust, and most importantly, choose. Just as establishing guardianship is a powerful gift that your children will hopefully never have to actually know about or experience, a testamentary trust can also continue to provide and support your children if something were to happen to you.

There are an almost endless number of different kind of trusts and you can put just about any asset in a trust. Testamentary trusts are one of the most common kind of trusts I establish for my clients. You may recognize the first word of the type of trust from “last will and testament.” Indeed, a testamentary trust is a trust written into your will and provides for the distribution of a portion or all of your estate.

Sounds simple enough, but you’re thinking, “What does this have to do with my kids?”

Different from an inter vivos trust, which is established during the settlor‘s lifetime, the testamentary trust kicks in at the completion of the probate process after the death of the person who has created it for the benefit of their beneficiaries.

Typically testamentary trusts are created for minor children or others (such as a relative with some kinds of disabilities) who may inherit a large amount of money if you (the testator) were to pass away. The general thinking is that you may not want a minor child, or even a young adult, to have uninhibited access to their inheritance until a certain age (and presumed level of maturity) is reached. (I can imagine what I would have done with an inheritance at, say, age 18 and it surely wouldn’t have been the smartest use of money!) The testamentary trust then terminates at whatever age you choose, at which point your beneficiaries receive their inheritances outright and can use the funds in any way they choose.

 

child with red heart

The testator can choose distribution to be distributed in percentages such as 25% at age 18, 25% at age 22, and the remaining 50% at age 25. Or, the trust funds may be distributed in full at a single age. (All at age 25 is the default if the testator doesn’t choose otherwise.) Distributions can also be made immediately upon your passing if all beneficiaries are legal adults (age 18 or older). The testamentary trust could also be set-up for disbursements around milestones, such as a percentage or full disbursement when the beneficiary graduates from an accredited two- or four-year college institution.

Testamentary Trustee

With a testamentary trust you also need to designate a trustee. The trustee is responsible for managing the trust property according to the rules outlined in the trust document, and must do so in the best interests of the beneficiary (for example, a minor child). Generally I advise the appointed guardian also be the trustee of a child’s testamentary trust.

Testamentary Trust Options

In my Estate Plan Questionnaire I offer clients three main options for testamentary trust organization. (Note that there can be more than one testamentary trust created in one will.)

  • Option 1: Separate trust fund for each beneficiary. Each beneficiary’s inheritance to be held by the trustee in a separate fund. Whatever is left in each beneficiary’s trust fund, if anything, will be distributed to that beneficiary when they attain the age(s) indicated in the following section. This option ensures that all of your beneficiaries are treated equally, regardless of needs.
  • Option 2: Single trust fund for multiple beneficiaries. The entire inheritance will be held by the trustee in a single trust fund for the benefit of multiple beneficiaries (such as multiple children). The trustee may make unequal distributions during the term of the trust if a beneficiary needs additional assistance. Whatever is left in the trust, if anything, will be distributed equally when your youngest beneficiary attains the age(s) indicated in the following section. This option will allow the trustee to accommodate a particular beneficiary’s needs by distributing more of the inheritance to that beneficiary during the term of the trust. (Recommended with younger beneficiaries.)
  • Option 3: No delayed distribution. Beneficiary’s inheritance may be made directly to the beneficiary or a court-appointed conservator if beneficiary is a minor/incapacitated. Funds will be distributed directly to the beneficiary at the age of 18.

 

Mom and daughter hugging

The important takeaway from all of this is that a testamentary trust can be entirely personalized to fit your wishes. For example, most folks want the testamentary trust written in such a way that their beneficiaries may have access to funds to pay for higher education costs like tuition, room and board, books, and fees, on top of the necessary funds needed for an adequate standard of care, protection, support, and maintenance of the beneficiary.

Estate Plan Revisions & Updates

If you already have an estate plan review it. Estate plans never expire, but major life events or a change in estate planning goals can necessitate changes. For example, if your family welcomed a new baby or adopted a child then it’s definitely time for update your estate plan to include them! Maybe something changes in the future with one of your beneficiaries and you want to change distribution percentages or ages? Simply contact your estate planning attorney and let them know your wishes.

A Lasting Love

 

hearts on a string

The love for your children knows no bounds and without a doubt you want to make certain you can still provide for them if something unexpected were to happen to you. There’s no day like today (or Valentine’s Day!) to get your ducks in a row just in case. The best place to begin is with my Estate Plan Questionnaire or by contacting me.

wealthy dollar bills

There is a rumor that has been floating around that only the rich need estate planning. That is extremely false. Everyone needs an estate plan, but the wealthy don’t need estate planning as much as the middle-class and working-class folks. If this contradicts everything you’ve ever thought about estate planning allow me to explain.

The Case of Kingston Lear

Suppose Kingston Lear (get it?!), a wealthy Iowan, decides he doesn’t need a qualified and experienced estate planner, he can do it himself, or use an online, one-size-fits-all service. Hey, Lear figures, this way he’s saving both time and money. Also, nothing is going to happen to him for a while, he can get around to doing a proper estate plan with a proper estate planning professional “someday.”

Of course, “someday” never comes, but Lear’s death does. His three daughters are aghast that Lear has no real estate plan. The template resembling an estate plan is completely inadequate for the size and complexity of Lear’s assets.

A Matter of Trusts

Lear could have easily, with the help of a professional advisor, set up a trust (even a plain, “vanilla” revocable living trust would have worked) to avoid probate. But, the online service he used didn’t even explain the difference between wills and trusts. So, Lear’s assets all must go through probate. This means that the time and money Lear though he was saving is gone in a flash.

Probate Costs and Fees, If You Please

Probate fees are going to equate to at least 2% cut of Lear’s estate. Remember, Lear’s estate is large and complex and valued at $10 million, so the actual figure is probably going to be more like four percent.

Using 4% as the figure for probate fees means a loss of $40,000 ($10 million X .04 = $400,000). This is $400,000 that could have been passed down to his daughters through a trust, or split generously between his heirs and charitable organizations near and dear to Lear’s heart.

Also, court costs may amount to another 1%, or loss of $10,000 more ($10 million X .01 = $100,000).

Loss of Privacy

Another major benefit of a trust—again, not explained to Lear because didn’t seek any individualized advice—is privacy. A will (or most any document that goes through probate, absent very special circumstances) is simply a public document. Anyone can read, copy, share, and write about it.

Consider one of Lear’s major assets was an ongoing business—a Shakespearean-themed jousting complex, where families could have fun practicing jousting.

horses at fence

Unfortunately, in some of the probate papers, it was disclosed that there had been numerous complaints by the Iowa Horse Association about the treatment of horses. It isn’t long until this hits the blogs, and some of the more sensational aspects of the report (though hotly disputed) goes viral. The jousting park which had been quite profitable, is now eschewed by all the good people of the area. The daughters are forced to sell the business asset to preserve the family’s good name (or what’s left of it) and sell at a loss. While the jousting park had been worth as much as $1 million, the daughters have to sell, so there’s a “paper loss,” but nonetheless less a loss, of another $900,000.

Loss of Future Profits

The $900,000 is a conservative figure; it doesn’t include lost future profits. If not for the scandal becoming public, who knows how long the jousting park could have remained really popular and this profitable. Years? Decades? It’s quite difficult to quantify, but it’s certainly probable that there are some lost profits. The question is: how much?

Costs of Cases

Because Lear’s will wasn’t drafted by professional, there are many ambiguities and loopholes. It’s not long before the three daughters begin fighting and, with unclear direction from their father, they wind up suing each other.

Taking a court case all the way to trial can easily mean $50,000 in attorney’s fees, plus each daughter will want and need her own attorney. So, another $150,000 is lost to attorney’s fees!

Total Losses Equal?

Lear could have had his estate plan done by an Iowa professional for a few thousand dollars. Instead, he lost a total far greater than that:

  • Probate Fees: $400,000
  • Probate Court Costs: $100,000
  • Loss on Sale of Jousting Park: $900,000
  • Loss of Future Profits of Jousting Park: Incalculable?
  • Attorney’s Fees for Daughters’ Litigation $150,000

This is a hit for the inheritance of $1.55 million, leaving $8.5 million (rounded up), or a little less than $3 million per daughter. But you know what? That still leaves an inheritance of $8.5 million to be split amongst three sisters.

The Rich Can Afford Bad Estate Planning

crown - silver

Lear acted unwisely, arguably recklessly! A great deal of his money was wasted that could have been used for great charitable work in Iowa through local nonprofit organizations. But, for all his foolishness, Lear’s daughters still end up with $3 million each. Will the daughters incur much suffering with “only” $3 million? No.

That the rub; the rich can afford to make big (and small) estate planning mistakes.

You Can’t Afford Bad Estate Planning

Let’s look at this from a normal Iowan perspective. At least 2% in probate costs and fees, a huge drop in value in a key asset, attorney’s fees for litigation…can a middle-class estate merely shrug these kinds of losses off? Not a chance.

The rich aren’t like you and me. They can badly botch estate planning. You and I can’t afford to make mistakes with our estates; there’s not room (and not enough money!) for error.

Need an estate plan but aren’t sure where to start? It’s easy from start to finish. Fill out my obligation-free Estate Plan Questionnaire or contact me.

footballs on wall

Turn on ESPN, put on your jersey, and stock with fridge with a cold beverage…the College Football Playoff National Championship is tonight. While reading up on the stats and predictions for the southern powerhouse showdown between the Alabama Crimson Tide and Georgia Bulldogs in Atlanta’s Mercedes-Benz Stadium, I couldn’t help but make a connection with estate planning. Goal posts to estate planning goals may seem like a stretch, but hear me out.

Football is a complex game—the field is full of moving parts and competing strategies; it’s a game of inches where just a few missteps or right moves can make a huge difference. Estate planning works the same way. Here are just five of the surprising similarities between estate planning and the game of football:

1. Your Clock Will Indeed Run Out

Just like every football season eventually comes to an end, your (hopefully long and healthy) season will also come to a close. When it does, you need a special kind of playbook for the rest of your team…AKA an estate plan. In this analogy an experienced lawyer is the great coach who is going to help you put plans in place for when the game changes unexpectedly or the stadium lights turn off for the last time. And, just like so much can change over the course of a season, a lot will happen over the course of your lifetime. That’s where annual reviews and revisions after significant events fit in.

While it is often difficult for people to ponder their unavoidable exit off their own fictitious field, preparation for what happens after your season is over can be one of the most comforting aspects of financial and legal planning.

2. The Main Players

Let’s take this analogy a bit further and put some estate planning terms into football speak.

Estate – An estate is the whole playbook, containing the following documents: your will; health care power of attorney; financial power of attorney; disposition of personal property; and final disposition of remains. (Click on the link preview below to delve deeper.)

Will – A will deals primarily with the distribution of assets and care for minor children. You need to make certain the will is well drafted, solid, and can stand up in court. Keep in mind though, important assets such as a life insurance policy payouts, retirement assets, and investment accounts may well contain beneficiary designations that trump your will.

Trust – You have lots of different options with this player. A trust can dictate how your assets will be dispersed, the timeline and manner in which they are dispersed, and who’s overseeing the process.

3. You Must Make Mid-Season Starting Lineup Adjustments

Just as a coach may switch up who’s starting partway through the season, you’ll may need to make adjustments to your estate plan as things inevitably change over the course of your life. Big events like marriage, birth of a child/grandchild, moving to a different state, a large change in financial status, divorce, and other significant changes are good reason to review your “playbook.”

4. No ‘I’ in Team

Your loved ones and close friends are all a part of your team; part of being a strong team player is including them on the plays you’re making. Discuss important aspects of your estate plan with the people it involves to avoid any confusion or conflict when it comes times for them to carry out your wishes. For instance, if you have minor children (under age 18) you’re going to want to establish legal guardianship if the worst happens and you’re no longer around to care for them. You’ll want to discuss with your chosen guardians ahead of time to make sure they’re willing and available to carry out the responsibility.

5. Final Score

football on field

 

There are probably at least a few more good football analogies I could tie into the conversation of why you need an estate plan, but the most important takeaway is that you never know when the game is going to change. So, you need to have your “playbook” written out ASAP. The best place to start is with my free, no obligation Estate Plan Questionnaire. You can also shoot me an email or give me a call at 515-371-6077 to discuss your situation (or football).

Person writing on paper

A last will and testament certainly sounds like a complex document. But, when boiled down, your will answers just three simple, yet important questions.

  1. Who do you want to inherit your assets?

A will provides for the orderly distribution of your property at death according to your wishes. By property, I mean everything you own. Your property includes both tangible and intangible things. An example of a tangible item would be your stamp collection. An example of intangible items would be stocks and bonds.

mom and daughter holding hands

  1. Who do you want to be in charge of carrying out your wishes as expressed in the Will?

In a will, you also name the “executor” of your estate. The executor is the person who’s responsible for making sure the will is implemented as written. Needless to say, this is a very important position, and you want to name someone you can trust completely, and you know to be responsible and competent.

  1. Who do you want to take care of your kids?

If you have minor children (i.e., kids under age 18), you’ll want to designate a legal guardian(s) who will take care of your children until they are adults. Also, a will can set up a financial trustee (may be the same as the guardian) who can oversee and be responsible for your child’s funds until they are old enough (and mature enough) to inherit property.

 

Without a Will, There’s No Way

Without a last will and testament, you’ve given no guidance to anyone about who should inherit your property, who should be in charge of carrying out your wishes, and who you want to be your kids’ legal guardian. Not having a will creates unneeded stress and heartache, and even total chaos, for your loved ones and friends. This distress would also come at the worst possible time—when they are mourning your passing.

Drafting a quality estate plan that incorporates your wishes and goals is the height of responsibility. And if estate planning sounds intimidating, fear not! We’ll walk through the five steps of estate planning together. The best place to start is with my Estate Plan Questionnaire.

I’d love to hear from you. You can email me anytime at gordon@gordonfischerlawfirm.com.