If Only All of Life’s Critical Issues Could be Resolved by “Pokemon Go!”

As I write this I can see what can only be described as a swarm of 20-somethings wandering around Occoquan, the quaint small town where our office is located, with their smart phones leading them to and fro. After some initial confusion on my part, I recalled a story on the news last night about the “Pokemon Go” phenomenon where the new app leads users to find game items via the GPS function of a smart phone. Admittedly seeing these millennials wandering around playing this game brought out my grumpy old man “get off my lawn” tendencies but then I started thinking about the possibilities.

The first possibility was one that was on the news last night telling stories of players who were so distracted they walked into poles, traffic, other people, etc., and/or suffered injuries of one sort or another. Apparently the game is not smart enough to alert users about these hazards. So I started thinking wouldn’t it be great if the game could incorporate some real life issues into it that would help the player “win” in some important areas like legal readiness and planning for their  financial futures.

The hazard scenarios in playing the game could be addressed at the outset by asking the player if they had completed their organ donation card yet. Or had they given a loved on a Durable General Power of Attorney (DGPOA) to be able to take care of things for them if they became disabled? Even a dependent child if over the age of 18 (I am talking about your young “adult” college student or remain at home child here) needs a DGPOA or other legal documents to allow a parent or significant other to act for them in the case of disabling injury without having to go to court.

Similarly, what if the injuries sustained while playing were life threatening? Would the player’s loved ones know what they would want in terms of end of life care? Would they have the legal authority to act even if they did? And of course in the event of the ultimate tragedy of someone dying unexpectedly, there is no place in the “Pokemon Go” game for the player to get a Will in place before this sad occurrence.

Okay, so those are the depressing aspects of the “game.” So let’s look for an additional feature of the game that would tell players the importance of not just capturing creatures (or whatever it is they do—I am still not sure) but the benefits of saving early and allowing the real magic of compound interest to work for you. Or to set up a spending plan so they don’t run out of resources in the real world before they can get a money “recharge.” Or about the “free money” aspects of Roth IRAs or employer contributions to retirement plans. These could be considered “power up” parts of the game.

Despite my curmudgeonly tendencies these days I am happy to see young folks getting out and enjoying a nice sunny day, getting some exercise, and communicating with one another, albeit with a smart phone in their hands and having cryptic conversations about things I can’t understand. So, good for them. I hope that the less fun things I mentioned in this article are things they already have thought about and taken care of. I am not confident of that though, since statistics show that most people (of all ages) have not taken care of the essentials of legal and financial readiness. That is unfortunate. Not just for the person who becomes injured, disabled, or suffers an untimely death. But for their loved ones left trying to work through both the emotional impact of what is going on but also having to deal with legal matters or financial consequences. Too bad there is not game or app for that….


Milk, bread, toilet paper, [financial plan, legal readiness documents]: Winter Storm Preparation, DC-Style!

As I write this on January 21, 2016, we in the Washington, DC area are well along on our pre-snowstorm panic and preparations. Mother Nature was kind enough to give us a sneak preview last night with about an inch of snow at the evening rush hour which created all kinds of chaos. Now, facing the prospect of a foot or more of snow, and a legit blizzard as well, the rush to the stores started early. The storm essentials, milk, bread, and toilet paper, are already in short supply. But apart from those “essentials,” are you really prepared for this storm or, for that matter, whatever the future brings?

Sadly I can predict that there likely will be several deaths and serious injuries in our area related to the storm, whether through accidents, heart attacks while shoveling snow, home fires, or similar tragedies. While you may have stocked up on the storm essentials, have you prepared your family in case a tragedy strikes you or a loved one?

Part of your preparation should include a review of your personal finances. Specifically, you should do an insurance check-up to make sure that you know what insurance coverage you have, that all beneficiary designations are correct, that all premiums are paid to date, and that your family knows what you have, where it is, how to access it. Your family should also know about your various bank and other financial accounts, including retirement plans, IRAs, etc. If they don’t know what you have and where it is it will add unneeded stress at an already difficult time for your loved ones. Further, even if you have good records and your account information can be found, can anyone get access to your accounts with the proper legal authority and password?

On the subject of proper legal documents, an essential legal readiness plan for every adult (and that means anyone over the age of 18—even dependent students!) should include the following: 1) A Durable General Power of Attorney to allow a trusted person(s) to act for you on financial and other matters if you become disabled; 2) A Health Care Power of Attorney and Advance Medical Directive/Living Will to allow someone to make medical decisions for you if you are unable to do so; and 3) A Will or Trust to make things easier for your loved ones upon your untimely death. You can learn more about these at www.MyPeaceOfMindPlan.com and take a free assessment of your own legal and financial readiness.

The bottom line, while your loved ones will appreciate that you have milk in the fridge, bread in the cupboard, and toilet paper at the ready, should something unfortunate happen to you they will appreciate even more that you were thoughtful enough to truly be prepared for bad situations.

Reilly Law, PLC offers a complimentary personal organizer we call a Peace of Mind Plan Roadmap. Send us an email at info@ReillyLawPLC.com and we will be happy to send you the newly updated fillable PDF Roadmap document for your own use.


"Stuff," Money, and Music

I think it is safe to say that for anyone who has spent time cleaning out someone’s house after a life changing event the words “I wish [Mom and Dad/Grandma/Aunt Mildred, etc.] had more stuff!” have never been uttered. I know those were not the exact words I have used during the clean-out process for my family members. There were perhaps other, less diplomatic, words used but nothing that indicated I wished there was more stuff to be dealt with!

I have had occasion to revisit this idea with even more mundane activities such as moving or cleaning out a garage or basement. We all have stuff, and we all keep accumulating stuff, and occasionally we sell, donate, recycle, or dispose of stuff, but over time there is generally more input than outflow. So we end up with lots of stuff – maybe even things we need and use pretty regularly.

But what about the other stuff that we have and don’t seem to need or use? We, or someone else if it was a gift, spent money on the stuff. Maybe it seemed like a good idea at the time but even with that it still involved the use of a limited resource – our income and assets. This is not an uncommon phenomenon by the way. All you have to do is see the many ads for shelving, storage bins, and other resources to help us manage our stuff and you know that accumulation is a part of our culture. But someday it is very likely that someone you love is going to have to deal with your stuff and I am pretty confident that they will not be wishing you had even more of it!

Which brings us to the third element of the story – music. No, I am not talking about the collection of vinyl records or, even worse, cassette or 8-track tapes(!), found in the stuff in the basement, but some lessons that can be learned from some recent songs.

The Zac Brown band has a couple of entries here. First is the sentiment that is the antithesis of accumulation: “I've got everything I need and nothing that I don't.” In another song they touch on a theme which is a core tenet of Reilly Law, PLC and Safe Harbor Financial Advisors: “There's no dollar sign on peace of mind.” Finally, Sheryl Crow summed up what could be a motto for those who are considering getting more stuff: “It's not having what you want but wanting what you have!”

We all need “things,” but we don’t necessarily need more “stuff.” Knowing the difference between these two is the key to keeping accumulation under control – and just think of the money you’ll save not buying storage bins for other stuff you are buying and probably won’t use much (or at all) and will simply be left as part of the “treasure hunt” for family at some point down the road. Wouldn’t it be so much better to hear your loved ones say something like “Wow, there really is not much for us to go through” when it is time for the big clean-out? I know that I would have been very happy to say that! 


How His, Hers, and Ours Accounts Can Really Cost You!

Many married couples make the decision to keep a bank or brokerage account in their own name without the other spouse having any access or visibility into the use of those accounts. Some folks call these "fun money" or "mad money" accounts and they are perfectly okay for married couples to have for purposes of their own choosing (presumably not for nefarious purposes though!).

The first problem arises in the event of the disability or incapacity of one spouse, as the other spouse will not have access to these accounts unless they have a valid Durable General Power of Attorney--and know about the account in the first place! Without a Power of Attorney the non-incapacitated spouse may have to go to court to get access to the other spouse's money if they need to for any reason. 

The second problem is in the case of death of a spouse with a "fun money" account in their own name. In the absence of a comprehensive estate plan most couples rely on joint ownership to transfer assets from the deceased spouse to the surviving spouse without having to go to probate. For example, a house owned as joint tenants or tenants by the entirety automatically passes to the surviving spouse at the moment of death. The legal process to formalize that transfer is just that, a formality. The same goes for a joint bank account.

In contrast, separately owned property, such as an individually owned bank account, or a brokerage account in one spouse's name without any type of transfer on death designation, generally requires a probate proceeding to transfer the assets in the account to the surviving spouse. In some cases, a "fun money" account of a few thousand dollars will cost more to take through probate than the value of the account so it is often just ignored. If you get the image of essentially setting fire to a pile of cash you see the problem with this type of account. It definitely loses its character as "fun" money and now is better described as "make me mad" money!

While I certainly recommend a comprehensive estate plan of some type, at a minimum couples with accounts in their own name should race to the bank or brokerage and make their accounts a Pay on Death (or POD) account (for bank accounts) or a Transfer on Death (TOD) account for brokerage accounts. This type of account designation preserves your privacy during your lifetime--your spouse still has no access or visibility into these accounts--but it gives the bank or brokerage a person to transfer the assets to after your death rather than being required to pay it to your estate in a probate proceeding. This will save thousands of dollars and months of time.

Keep the "fun" in fun money by taking this simple step! If and when the time comes when a POD or TOD transfer is made your family will really appreciate it.


Yes, It’s Tax Time Again, But That Can Be A Good Thing.

Okay, I don’t mean that preparing your tax returns and paying taxes is the good thing, though as is often heard around tax time, the old chestnut from U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., "Taxes are what we pay for civilized society” does ring true.

The good thing I am referring to really is only tangentially related to taxes. Since you have to pull all of your financial information together for tax return preparation this is a great time to review your investments, both retirement and non-retirement accounts, to assess not only how well they are performing but how they are doing with respect to your investment objectives and asset allocation plan. If that last part of the sentence leaves you scratching your head then you definitely need to undertake this review. Investing for retirement and other goals should not be a random process. Similar to a football team’s approach to a game or a season, your investment plan should have a goal, a playbook geared to reaching that goal, execution of that playbook, and a periodic review to assess how the playbook is working during the season and making adjustments as necessary.

Putting this in investment terms you should have an asset allocation plan, perhaps even an investment plan (often called an investment policy statement by financial advisors), that factors in your risk tolerance, investment timeline, and other resources such as a guaranteed pension or an expected inheritance, among other factors. Your investments should match up to this asset allocation plan to give you appropriate portfolio diversification.

But this is not a one-time proposition. Over time market factors will cause changes in the asset allocation percentages of the various investments in the portfolio due to differing levels of growth (or loss). While the overall value of your portfolio may have increased in the past 6 months or year, the original asset allocation percentages you selected for your personal goals and risk tolerance likely have changed, sometimes dramatically.

For example, let’s say your portfolio asset allocation originally was 25% each in U.S. stocks (or stock mutual funds or ETFs), international stocks, bonds, and money market (cash). [FYI--This is not necessarily a good mix!]. A year later the changes due to market forces results in an increase in the portfolio value (a good thing), but a new asset allocation percentage of 32% U.S. stocks, 20% international stocks, 30% bonds, and 18% money market cash (not such a good thing). If you don’t rebalance this portfolio it likely will continue this disparate growth and move further away from your investment game plan. As described by one financial services company, the “objective of rebalancing is to retain your preferred level of risk by maintaining your account’s original asset allocation over time.”

In addition to being a good time to review your investment portfolios and do your rebalancing, it is also a good time to ensure that your beneficiary designations on retirement accounts and insurance policies are up to date to avoid any unpleasant surprises if something unexpected should happen.

Reilly Law, PLC and our affiliated fee-only financial planning firm, Safe Harbor Financial Advisors, LLC (www.SafeHarborFinancialAdvisors.com) can help you with these timely projects, oh, and your tax returns too! 


Facebook Ever After—New “Legacy Contact” Rules Allow Your Page to be Active After Your Death.

Until recently a deceased person’s Facebook page was, in effect, locked down by Facebook once they were notified of the death. This meant that no new content could be posted, and he word Remembering was shown next to the person's name on their profile. Depending on the privacy settings of the account, friends could share memories on the memorialized Timeline and content the person shared (ex: photos, posts) stays on Facebook and is visible to the audience it was shared with.

Facebook recently announced a new option called a “legacy contact” that is essentially someone who the account holder designates in advance as the curator or digital executor of their Facebook page. As described by Facebook, a legacy contact is someone you choose to look after your account if it's memorialized. Once your account is memorialized, your legacy contact will have the option to do things like:

◾Write a pinned post for your profile (ex: to share a final message on your behalf or provide information about a memorial service);

◾Respond to new friend requests (ex: old friends or family members who weren't yet on Facebook); and

◾Update your profile picture and cover photo

You also have the option to allow your legacy contact to download a copy of what you've shared on Facebook but there are still limitations on their authority.Your legacy contact can't:

◾Log into your account;

◾Remove or change past posts, photos and other things shared on your Timeline;

◾Read messages you've sent to other friends; or

◾Remove any of your friends

The key to this new feature is the appointment, in advance of death, of your legacy contact. It is a simple process. To add a legacy contact:

1. Click in the top right of Facebook and select Settings

2. In the left menu, click Security

3. Click Legacy Contact

4. Type in a friend's name and click Add

5. Click Message to let your friend know they're now your legacy contact

If your account is memorialized, your legacy contact will be notified.

The Help area of Facebook has more information about memorialization and how to add a legacy contact to your account. While this legacy contact concept may seem gloomy or distasteful to many, certainly those Facebook account holders with serious illnesses may want to consider appointing a trusted person to serve in this role to keep their legacy alive.


Benefits of Trusts for Average Folks

During a recent client meeting I was discussing the relative merits of a Trust-based plan over a Will-based plan given the circumstances of these particular clients. The clients said something which I have heard a lot over the years in various versions—“we are not wealthy people like Warren Buffett or Bill Gates, we don’t need Trusts like they do.”

My response to them is that we are not talking about the same kind of Trusts that Mr. Buffett or Mr. Gates, or the many family Trusts you hear about on National Public Radio, rather we are talking about Trusts for the purpose of providing a means for financial and life management while you are alive, even if you are disabled, as well as a means for an orderly, private, and quick distribution of your assets to your loved ones, to charities, or to whoever you choose, after your death, with the ability to provide additional protection for minor beneficiaries or those with special needs for years after you are gone.

I just received a very nice discussion of the many uses of Trusts for the average family from my friends at the Alaska Trust Company. Rather than try to improve on their excellent product I am including it in this blog post for your consideration.

Trust Situational Checklist

> The client has concerns about family members or beneficiaries who cannot manage their financial affairs. In this situation the estate plan can contain a trust that will prevent beneficiaries from squandering their inheritance and protect them from creditors, lawsuits and divorces. In some cases, you may even be protecting the heir from other family members and friends who want to borrow money. The trust can be written in a way that will pass assets on to the beneficiaries immediately upon the client’s death, or the client can designate distribution over time in what amounts and even for reasons that they specify.

> The client is on their second (or later) marriage and/or has a blended family. Families with second marriages and blended families present some additional estate planning challenges due to the various relationships involved. A potential hurdle is figuring out how to divide an estate when each spouse has children from a previous marriage. For example, in a blended family, the husband may use a trust to make sure that his biological children are the beneficiaries of his life insurance benefits. Without a trust in place, it is possible that his current wife receives the benefits and when she dies, that money would pass to her biological children, leaving the husband’s children with nothing.

> The client is concerned about privacy. Unlike a Will, which is public information, trusts are confidential. For this reason, people who want to protect their privacy can benefit from a trust. This can be helpful for clients who wish to maintain privacy over how and to whom their assets are distributed.

> Your client is in a relationship without specific legal status. Unmarried couples miss out on the biggest estate tax break there is: the unlimited spousal exemption. The couple might assume that each will leave the other everything. While this is possible, the first to die will pay an estate tax and then the inherited assets will be Included in the estate of the second person, who will then have to pay an estate tax on the same assets. Ideally in this situation they should leave property in a trust for the other to avoid paying taxes on the same money twice. Unmarried couples also need to beware of the consequences of unintended gifting during life. Rules about transferring property freely between husband and wife do not apply in this case.

> The client has a disabled child. In this case, a special needs plan should be carefully designed to make sure the disabled child continues to receive their government benefits. Inheriting even modest assets from any source can cause them to lose important benefits such as health care and housing. A Special (or Supplemental) Needs Trust (SNT) can be created to ensure that they will be taken care of once your client is gone.

The SNT has two main benefits:

1. The beneficiary can enjoy the assets that were intended for their benefit without disqualifying them from important governmental benefits.

2. If the beneficiary lacks the mental capacity to handle financial affairs, the trust can be administered by either a family member and/or by a trustee who can look out for their best interests, giving your clients peace of mind.

> Client is a professional in a high risk occupation. Assets that are transferred through a trust can be protected from creditors, which may be an attractive feature for people in professions that carry a substantial amount of risk such as business owners, doctors, architects and lawyers.

> The client has a business or holds an interest in such a business. Passing the family business intact from one generation to the next is one of today's most challenging estate planning problems. Especially, in situations where your client is trying to give the company over to one child who is active in the business while maintaining proportionate distributions to others who are not. Using a trust, you can help your client keep the family business in the family for years to come.

> Couples without children. Clients without children may be concerned about who will look a5er their financial interests later in life. By setting up a trust, they can appoint a trust company to serve as a financial fiduciary giving them peace of mind in case they are ever in a position where they cannot manage their own finances.

Adapted from, and courtesy of, the Alaska Trust Company.


Casey Kasem’s final sendoff not what he would have wanted.

The recent death of legendary DJ and host of American Top 40 (and the voice of Shaggy on Scooby-Doo,a personal favorite!) Casey Kasem came at the end of a public spectacle of family infighting and legal action that undoubtedly Mr. Kasem would not have wanted. Disputes between his current wife and children from a former marriage about the care of Mr. Kasem, who suffered from Parkinson’s disease and dementia, led to a very public feud between the family members, filing of a missing persons report after he was removed from a California facility and allegedly moved to Washington State, and a court action where his children requested a conservatorship over their father's health care.

This tragic tale played out in tabloids, TV, and the internet, could have been easily avoided with the right legal paperwork in place. While I don’t know specifically if Mr. Kasem had signed these documents before he became incompetent, he should have had a Durable General Power of Attorney for financial matters, a Durable Health Care Power of Attorney, and an Advance Medical Directive/Living Will.

While these documents are important for everyone, they are particularly critical for someone in the early stages of dementia since it is only a matter of time until they will no longer be legally competent to act for themselves or sign new legal documents. In such cases where it is probable that the legal documents will be needed, and potentially be in place for a number of years, they can and should be customized to address the issues that arose in Mr. Kasem’s case—who is in charge of his care, the nature of that care, any wishes regarding visitation with his family members, particularly the children of his first marriage who already had a strained relationship with his current wife, and other specific matters.

No one likes to think about the depressing and difficult issues of disability, incapacity, and death, but not thinking about it, and not making any plans for such events, does not mean that they will not happen. The essential elements of a Peace of Mind plan, the Durable General Power of Attorney (financial and health care), Living Will, and Will or Trust, give you the opportunity to make those difficult decision now, while you can, appoint the people you want to act for you, and give them guidance about the way you would like to be cared for should something unfortunate happen to you. While your case may never make the tabloids or TV, in the absence of appropriate guidance your loved ones may struggle with understanding (or agreeing upon) your intentions and who should do what, and an already difficult and emotional time can become that much more difficult for them, possibly leading to irreconcilable rifts in the family. A very public figure like Casey Kasem would not have wanted his last news stories to be about family strife rather than about his remarkable career. You have the ability to make your final “news story” one of celebrating a life well lived rather than a fight over your unspoken intentions. A Peace of Mind plan can provide this guidance and keep the peace!


Your Loved Ones Need a Roadmap (and why a GPS won't work!)

Easter egg hunts. Games of hide and go seek. Scavenger hunts. All of these can be fun activities for children of any age. But there are some critical times when the need to find things is not fun. Among these are when a family member has become disabled or dies unexpectedly and you need to find out important information about their financial activities, what they own and who they owe, and what they would want you to do now that you are responsible for taking care of these things for them. For our example we will assume your widowed father has suffered a stroke and is in the hospital and not currently able to communicate with you.

As an initial matter, you have to determine if indeed you are the person entrusted with these responsibilities and if you have the legal authority to act for your father. In previous columns I discussed the essential legal readiness documents -- a Durable General Power of Attorney, a Living Will or Advance Medical Directive, and a Will or Revocable Living Trust. (For more information on these you can visit www.MyPeaceOfMindPlan.com).  We will assume your father had dutifully kept his legal readiness documents up to date and appointed you the Agent to act under his Durable General Power of Attorney which continues to be effective even if he is incapacitated.

So you are the right person with the right legal document to act. What now? You need to find out about your father’s personal finances—his sources of income, his monthly bills, his other bills such as property taxes, insurance, etc., and you have to make arrangements to continue to pay his bills. Do you even know where your father keeps this information? Do you have access to it? Do you know where he banks or which brokerage houses he uses? Do you know where his checkbook might be? Some people are very organized and they have detailed records in file cabinets, desk drawers, expandable folders, fireproof boxes, or some other location readily accessible. Others are a lot less organized and you may have to go on your own scavenger hunt to find everything you need.

But what if your father had become technologically comfortable and did his banking, investing, and bill paying online? What if he electronically filed his taxes every year? What if he kept all of his records on his computer? Do you know his account information, his passwords, or even if he did online transactions? The increasing use of paperless transactions means that you may have a difficult time in your “scavenger hunt” in finding the critical information you need.

If your father recovers presumably he can help you work through the many issues involved here. But what if he dies from his condition? Then you have an even more pressing need to determine what he had, who he owed, who owed him, what accounts need to be turned on or off, which government agencies need to be notified, etc.

While there is no simple solution to the problems of stepping into the life of someone else and taking over their personal finances for them, good organization and good communications in advance can be invaluable to all parties. One way to do that is to use an organizer such as the Peace of Mind Roadmap that we provide to our clients at Reilly Law, PLC. This Roadmap concept may seem like a throwback in a GPS era but we take the view that a map can always be used but a GPS relies on electricity/batteries and a good satellite connection which may not always be present. This is similar to having all of your critical information on a password-protected computer. You might be able to eventually access it, but it might be too late for some important transaction. Now think about your own situation. Would your family know what to do if something should happen to you?

You can get your complimentary Peace of Mind Roadmap by contacting Reilly Law, PLC at Roadmap@reillylawplc.com (please use “Roadmap” in the subject line) or by phone at 703-579-1936703-579-1936. You can also learn more about Peace of Mind planning at www.MyPeaceOfMindPlan.com or at www.ReillyLawPLC.com. Reilly Law, PLC specializes in comprehensive Peace of Mind planning. We offer free initial consultations and special rates for military, veterans, and civil servants, as well as young family specials intended to get you on the right path.

Reilly Law, PLC is located at 300 Ellicott Street, Suite B, in Historic Occoquan. Our phone number is 703-579-1936703-579-1936. We know you are busy so we offer evening and weekend appointments. For convenience we accept major credit cards. As one client put it recently, not only did he get his legal affairs in order, he earned miles towards their next family vacation!


A Dozen Difficult Questions

Ask yourself the following questions:

If I were to become disabled tomorrow:

1. Who would pay my bills?

2. Who would be able to make medical decisions for me if I cannot?

3. Would the family business continue?

4. Would my end of life care decisions be known and honored?


If I were to die tomorrow:

5. Who would get my property?

6. Who would care for minor children, parents, and/ or a spouse?

7. What happens to the family business?

8. Would the estate be settled according to my wishes?

9. Would taxes, fees, and costs be held to a minimum?

10. Would a trust have been appropriate for me?

11. Would my estate be settled in an appropriate and timely manner?

12. Will my family bicker and fracture based on the outcome of my estate distributions?


Failure To Create A Personalized Estate Or Peace Of Mind Plan Can Impact Your Financial Security!

Legal issues that impact financial security include topics such as: property ownership, estate planning, advance directives for health care, and guardianship for minor children.


Find out more at: www.MyPeaceofMindPlan.com or www.ReillyLawPLC.com