Kids / Minors / Children Issues Archives

Getting Divorced? Leave Children’s Life Insurance to a Trust

Posted on November 15, 2019

As a member of the First Spouse Turned Demogorgon Club, I can tell you with hindsight that divorce can be a wonderful thing: No more arguments, no more awkward Thanksgivings with creepy in-laws, no more washing the dishes during prime football hours. But at the same time, divorce is almost never positive during the initial process, self-doubt and anger consumes you, and (ultimately) you will have to deal with financial matters, particularly if you have minor children. And when child support or maintenance is in the picture, your former best friend is going to want to make sure that cool hard cash is still there if you pass away during the payment period. So, purchasing life insurance to cover your

Damian Hurley: Why Minimizing Estate Taxes is Not Always a Good Thing

Posted on July 29, 2019

For decades estate attorneys have been driven by a prime directive, a primary motivating cause that overcomes all other client desires: Minimizing estate taxes. I believe this is a huge mistake, and a recent court decision highlighted by a stern millionaire patriarch, celebrities, a free-living playboy, and an irrevocable trust shows us why. Today it takes a decent amount of money ($11.4 million or more) to face a federal estate tax when you die, and there are also certain irrevocable trusts, including GRATs and GRUTs, that further minimize or eliminate estate taxes. So, for many of us this article is not relevant, but for those who it is, it should come as no surprise that estate attorneys have traditionally focused

When Should I NOT Act as Mom’s Executor?

Posted on May 10, 2019

When your mom passes away with a valid Will and property being transferred by that Will, the Will is submitted to the Court who appoints an estate representative to wrap up her final affairs. This person or company – almost always named in the Will – is known as the Executor, and has the ability to do everything that your mom could do during her life: Collect her assets, pay creditors, review all of mom’s financial records and statements, file income tax returns, order her medical records, distribute her property as mom’s Will states, and even clean out mom’s closet (which she likely neglected to do before she died since, you know, she’s now dead). We say an Executor “steps

Angry Brothers Agree to Settle (Mom’s Estate)

Posted on October 5, 2018

You never know how close you are to your family until you have to share an inheritance with them. I am wrapping-up a case where my client’s mother died, leaving a Will that equally-distributed her real estate between her two somewhat-acrimonious sons. Usually this apartment would be sold, proceeds disbursed, and everyone would go their separate way. However, my client’s brother insisted that he could make them more money if he improved the real estate. His brother (my client) was not so hip on this idea – none of them had any real estate investing experience – but through sheer force, perseverance and presumption his brother had his own son move in (which he did – with a few kewl

Should You Treat Your Kids Evenly in Your Estate Plan?

Posted on September 24, 2018

I believe you do not need to treat children equally in your estate plan, even if they are equally responsible, equally financially-empowered, and on good terms with you and one-another. Some parents follow differing distributive patterns under Sharia Law or other cultural edicts, others leave disparate amounts to children if one has several children of their own and the other child does not. In the end, the decision of how to bequeath one’s money is the client’s decision. I had one couple who decided to almost completely disinherit their daughter. She was an active opioid addict for several years, and they felt leaving her substantial money (even if utilizing a trust with a substance abuse provision that would limit her

4 Reasons Your Family Disinherited You

Posted on May 23, 2018

I often get calls from indignant clients telling me their recently-departed parent or other family member has disinherited them, and they want to know their options. And while proving a Will that disinherits someone is never a foregone conclusion, they are usually walking up to home plate with two strikes against them. And many times, this was unexpected: The client had no clue why they were cut out of the decedent’s estate. From my experience, it is likely due to one of the following misperceptions you had: You did not give them enough attention. Face it: Spending time with elderly and sick people is not usually our go-to option for a Friday night. It can be very

6 Steps Before You Fund Your Child’s Home Down Payment

Posted on April 27, 2018

I have had an increasing number of clients approach me asking an increasingly-difficult question: “Should I provide my child with funds for her first home down payment, or focus on my own lifetime needs and leave my (presumably larger) estate as an inheritance when I pass away?” This is not an easy decision, since it depend both on the parent’s finances and health issues, and the child’s cash flow and social issues. Many middle-class parents realize their children’s purchasing power for real estate is significantly weaker than theirs was: Real estate prices have outpaced income growth over the last twenty years, while the number and cost of financial commitments (such as student loan debt and health insurance payments) have

5 Reasons UTMA Accounts Are Bad

Posted on April 26, 2018

Parents and grandparents sometimes look for easy ways to give money to younger family members. The challenge arises when the recipient is a minor (minors cannot own property in their own name until 18, with some exceptions) and when the donor wants to minimize legal fees. A Uniform Transfer to Minors Act [“UTMA”] account, which leaves funds to the child when he/she turns 21, used to be viewed as an appropriate way to leave funds to a minor now that would be paid out later when he/she reached a more mature age. UTMAs are inexpensive: You only need to set up the account at a financial institution, name an adult custodian for the account, and let the custodian buy a

What and When Should I Tell My Kids?

Posted on September 5, 2017

Parents who have gone through the estate planning process typically ask what information they should share with their children and when. The answer requires balancing many factors, but can be boiled down to a simple concept: Take responsibility and own up to your decisions, and don’t leave it to your kids to fight about it. First, if a child has been left out of a Will or is receiving less money than other siblings you may want to tell them so, and why. Clearly this is not a universal approach, but taking responsibility and informing them up-front allows the child to reconcile this fact. This will also help minimize your other children having to deal with the dispossessed child’s bitterness

College Kids in Trouble! Draft Your Child’s Health Care Proxy

Posted on July 14, 2017

Ah, the Ivory Tower, where high school kids aspire to escape to, and parents best hope for 4 years of peace and quiet. But with independence comes responsibility: Travel, driving, concerts, and protests. And drinking. Lots of drinking. And then comes a horrible injury or hospital admittance, followed by a parental realization: You are not allowed access to your adult child’s health care information, and cannot make decisions regarding their health care. In most states, the age of majority is 18, and once he or she moves out of his or her parent’s residence they are considered an adult with all of the privacy rights that inure to adults. The only individual who, by default, has access to

Second Wives: Reapers of Sorrow, Destroyers of Family Wealth!

Posted on June 14, 2017

In a world where our assets are constantly under threat from usurious taxes, government largess, financial predators and rapacious offspring, there is still NO worse threat to intergenerational family wealth than a second wife. People get married the first time for any one of a number of reasons: Family pressure, filling a void, the urge to have children, an inexplicable desire to emulate the lives of Al and Peg Bundy and passion. But these first marriages often end, sometimes with children left in their wake, and are replaced by a second marriage based on love, devotion and emotional security. In these second (or third) marriages, often one spouse tends to be significantly older and more financially secure than

The Roadmap to Your Family Should be in Your Will

Posted on June 9, 2017

The cornerstone of Probate, leaving your estate to whomever you want, is almost paradoxical since the process is not as easy as most people think. To the great surprise of heirs that are listed in the Will, the decedent’s descendants (or next closest relatives) must be put on notice during the Probate process to validate the Will. The very concept of the requirement of placing the next of kin on notice is foreign to most clients: Why does a person’s nearest relative, who the Testator may have loathed, still have to be placed on notice of the Probate of the Will, even if that relative is being disinherited? The answer: Our estate laws allow your closest family members the right

UTMA Accounts: The Good, Bad and Ugly

Posted on March 21, 2017

Uniform Transfer to Minors Act accounts allow a person to leave funds to a minor beneficiary without a court’s interference. In general, minors are not legally able to own property. If a minor comes into possession of a bank or investment account or proceeds from a life insurance policy or retirement plan, a court may have to appoint a guardian over the property. UTMA accounts sidestep this requirement by naming a custodian over the funds: the custodian oversees and invests the funds until the minor turns 21 years old. However, just because UTMAs avoid court oversight, does not mean they are devoid of other problems: Poor Investment Decisions: A custodian who invests the funds poorly relies on state

5 Special Provisions You Should Add to Your Will

Posted on March 15, 2017

At some level, American Wills have not changed much in the last 200 years: Just like in old-timey England you need to (1) state who gets what, particularly anything left-over (your residuary estate), (2) who shall manage your estate’s affairs (your Executor), (3) you need to sign your Will or have someone do it for you in your presence with your permission if you don’t do so yourself, and (4) you need two disinterested witnesses who sign your Will in your presence as you state it is your Will. However, there are a few modern developments and government programs that justify adding the following provisions to even the most routine Wills: Contingent Ownership of a 529 Plan: If you

How a Grandparent Should Gift Money to a New York 529 Plan

Posted on January 27, 2017

Funding a grandchild’s college education can be a beast: The amount of money that may have paid for your child’s four year undergraduate education may only pay for one year’s worth of tuition for your grandchild. This coupled with increasing housing costs and other relentless modern-day living expenses, make it hard for your children to adequately fund a 529 Plan to pay for your grandchildren’s college education. Here are a few ownership and funding choices a grandparent may want to consider when funding a 529 Plan for a grandchild: Open a 529 Plan as the Owner: Funding a 529 Plan is unlike most gifts. For most transfers, once you make a gift you have no way to get

Trusts: How to Protect a (Troubled) Child from Your Money

Posted on December 3, 2016

Parents: You are responsible for the financial education and well-being of your child. You have more life experience, you are the ones who brought your children into the world, and you are the one leaving your money to them. So take the extra step and make sure you give your children money in a responsible way. We’ve all heard of it: The child who spent all of his inheritance before he received it, the gambler, the substance abuser, spendthrift, and so on. In 2011, I had a 29 year old female client, whom I shall call “Janice” who didn’t have one penny to her name: Janice was living in a homeless shelter, on all types of public assistance, and almost thoroughly ignored

Simple Dos and Don’ts of Gifting for College Education

Posted on August 1, 2016

Higher education is usuriously expensive. The fact that a child’s education may cost as much as you paid for your first house should highlight the importance of gifting these funds in the correct way. You can pay an unlimited amount of money for a child’s education expenses, provided you pay the money directly to the educational institution. Qualified education expenses are looked at as a benefit to public policy, and therefore do not require the donor to fill in a gift tax return. The funds are also not deducted from your lifetime gift tax exemption, meaning you can continue to gift additional funds without having to assess a tax. Paying a child back for their student loan payments

When Do I Tell My Children They Are My Financial & Health Agents?

Posted on June 28, 2016

Most people name their children as their agents (or else as successor agents if the client has a spouse). This includes naming a child as a Power of Attorney, Health Care Proxy, Executor or Successor Trustee. Of course, the child sometimes doesn’t know about this, and many attorneys do not discuss the topic in depth with the client. Most children don’t even know where their parent’s legal documents are. This can cause confusion, and can lead to their frantic scrambling at crucial times. Knowing when to tell your children they are agents is tricky, and often relies on a case-by-case analysis of the family and the children. Some 21 year olds may be ready to know their role before some 40 year

The Missing Pre Nup: Add a Family Trusts Band Aid

Posted on May 20, 2016

Attention parents with assets: Tell your children they must have a prenuptial agreement! And when they respond “No, I love him, that is not romantic, we will be together forever!”……panic!!! Then take a breath…PANIC a little more, then contact your T&E attorney to discuss how to protect your family assets using a family trust with a suitable trustee. The Family Court (more appropriately called the “Divorce and Fleece Court”) is known as a “court of equity”, meaning it can look at any factor relating to assets and income, and make a completely subjective (some may say arbitrary) decision as to who gets what. When a child is too shy or stubborn to get a prenuptial agreement, it is your job

College Kids in Trouble: Parents as Health Care Agent for Children

Posted on April 13, 2016

When a person may be subjectively considered an adult varies based on the person and the observing individual: My clients presume I was an adult long ago, my parents have begrudgingly accepted I may have final come of age, and an ex-girlfriend stated moments after we broke up that I would remain a child for the rest of my life. Fortunately, that girlfriend is long gone and, fortunately for her other ex-boyfriends and the rest of us in doubt as to our maturity, the law states that we are all considered an adult for legal purposes at age 18. This is an interesting public policy, since we are not physically or emotionally finished maturing at that age, and (probably due

Cain and Abel: When Siblings Despise Each Other

Posted on July 17, 2015

There are no perfect families. Even the first biblical family had an extreme sibling rivalry (with some rather bad results). And while most of us don’t have to worry about such an extreme outcome, many parents do worry that their children will not play well in the estate sandbox as their parents age and pass away. The worries: One child helps mom and dad as they age, is given a lot of money prior to and after their passing, and the other child brings a lawsuit for absconding with the money that they feel is one half theirs. One child helps mom and dad as they age, is given the same amount of money as the child who did nothing,

Dealing With the Unthinkable: Handling Affairs After the Death of an Adult Child

Posted on April 24, 2015

I was 4 years old when my father passed away. This obviously caused me a great deal of childhood trauma, and the associated financial and emotional cost to my family to “rehabilitate” me was substantial. Only as I have aged and entered this profession have I become aware that his death seriously affected many other people in the family, not least of which was my mother. But instead of choosing the more obvious individuals, let’s discuss the strain that affected his parents, my grandparents. Depending on the family’s financial dynamic, the loss of an adult child can be absolutely devastating: Some parents have placed an enormous amount of resources on raising that child, and may have sacrificed to the point

SIBLING RIVALRIES: The Funeral: Who is in Charge?

Posted on March 24, 2015

The first sibling rivalry goes back to the “first” siblings, Cain and Able. It was not the last (though the outcome was a little more dramatic than the average sibling rivalry). Of the many rivalries that have taken place since, one that is too often overlooked is over the parent’s disposition of their remains upon their passing. I have seen situations where one sibling [we’ll call him “brother”] was the local child living with his mother, and the more distant child [“sister”] lived a few thousand miles away. Brother and sister had not liked each other for decades. When mom passed away, brother did not tell sister, and decided to hold a small funeral where mom’s funeral service was highly

Smart Ideas for Making Your Agents Known (When Needed)

Posted on February 24, 2015

Too many attorneys fail to inform a person’s Power of Attorney, Health Care Agent, or Executor that he/she has been named as a person’s agent or, even worse, fail to tell their clients to inform these people of their responsibilities. These practitioners appear to have the attitude of “I’ve been paid, you have your legal documents, let’s both move onto the next thing in our lives.” While this does not rise to the level of legal malpractice, it certainly is inconsiderate and potentially dangerous, for the following reasons: These documents are not public record. If there is an emergency, how is a Health Care Agent going to be identified by the admitting health care facility? The documents may be hard

2015 Medicaid Series: Beware of Transferring Too Much Too Early

Posted on January 13, 2015

My next several posts will be centered on Medicaid planning. This will cover topics affecting people who are planning for future transfers to their children, people with ailing parents, as well as those who have neither living parents nor natural beneficiaries. Let’s start from the top. People preparing precautionary Medicaid planning for themselves are typically (hopefully) planning several years in advance: They have reached their mid-late seventies and are starting to enjoy a less frenetic lifestyle, or may have long-term health concerns that are just starting to manifest. They have worked hard for their money, have a possible surplus of assets, and have no desire to use these asset to pay for what they perceive Medicaid will cover in the