Learn from this Rock star’s mistakes

Do you have a “blended family”? Learn From Tom Petty’s Mistakes: His Daughters and Widow Are Now Locked In Bitter Battle Over His Estate

Recently, Tom Petty’s daughters escalated the battle over their late father’s estate by suing Petty’s second wife. They’re asking for $5 million in damages. In the lawsuit, Adria Petty and Annakim Violette, claim their father’s widow, Dana York Petty, mismanaged their father’s estate, depriving them of their rights to determine how Petty’s music should be released.

Petty died in 2017 of an accidental drug overdose at age 66. He named Dana as sole trustee of his trust, but the terms of the trust give the daughters “equal participation” in decisions about how Petty’s catalog is to be used. The daughters, who are from Petty’s first marriage, claim the terms should be interpreted to mean they get two votes out of three, which would give them majority control.

Alex Weingarten, an attorney for Petty’s daughters, issued a statement to Rolling Stone magazine, asserting that Perry’s widow is not abiding by Petty’s wishes for his two children.

“Tom Petty wanted his music and his legacy to be controlled equally by his daughters, Adria and Annakim, and his wife, Dana. Dana has refused Tom’s express wishes and insisted instead upon misappropriating Tom’s life’s work for her own selfish interests,” he said.

In April, Dana filed a petition in a Los Angeles court, seeking to put Petty’s catalog under control of a professional manager, who would assist the three women in managing the estate’s assets. Dana alleged that Adria had made it difficult to conduct business by acting abusive and erratic, including sending angry emails to various managers, record label reps, and even members of Petty’s band, the Heartbreakers.

Since Petty’s death, two compilations of his music have been released, including “An American Treasure” in 2018 and “The Best of Everything” in 2019. Both albums reportedly involved intense conflict between Petty’s widow and daughters, over “marketing, promotional, and artistic considerations.”

In reply to the new lawsuit, Dana’s attorney, Adam Streisand, issued a statement claiming the suit is without merit and could potentially harm Petty’s legacy.

“This misguided and meritless lawsuit sadly demonstrates exactly why Tom Petty designated his wife to be the sole trustee with authority to manage his estate,” he said. “Dana will not allow destructive nonsense like this to distract her from protecting her husband’s legacy.”

Destructive disputes, a sad truth

When famous artists leave behind extremely valuable—yet highly complex—assets like music rights, contentious court disputes often erupt among heirs, even with planning in place.

There is a greater chance of such disputes in blended families.  If you’re in a second (or more) marriage, with children from a prior marriage, there is always a risk for conflict, as your children and spouse’s interests often aren’t aligned. In such cases, it’s essential to plan well in advance to reduce the possibility for conflict and confusion.

Petty did the right thing by creating a trust to control his music catalog, but the lawsuit centers around the terms of his trust and how those terms divide control of his assets. While it’s unclear exactly what the trust stipulates, it appears the terms giving the daughters “equal participation” with his widow in decisions over Petty’s catalog are somewhat ambiguous. The daughters contend the terms amount to three equal votes, but his widow obviously disagrees.

Reduce conflict with clear terms and communication

It’s critical that your trust contain clear and unambiguous terms that spell out the beneficiaries’ exact rights, along with the exact rights and responsibilities of the trustee. Such precise terms help ensure all parties know exactly what you intended when setting up the trust.

You should also communicate your wishes to your loved ones while you’re still alive, rather than relying on a written document that only becomes operative when you die or should you become incapacitated.  Sharing your intentions and hopes for the future can go a long way in preventing disagreements over what you “really” wanted.

For your family’s sake

While such conflicts frequently erupt among families of the rich and famous like Petty, they can occur over anyone’s estate, regardless of its value. Attorney Myrna Serrano Setty can  help you draft clear terms for all of your planning documents. And because Myrna is a trained family mediator, she can help facilitate family meetings, where you can explain your wishes to your loved ones in person and answer any questions they may have.

Doing both of these things can dramatically reduce the chances of conflict over your estate and bring your family closer at the same time. And if you have a blended family (meaning children from a prior marriage), we have more ideas about how you can head off future conflict at the pass with proper planning now.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer an estate Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call today to schedule a Planning Session. Mention this article and learn how to get this $500 session at no charge.

When a Will Isn’t Enough to Avoid Conflict: Remember Your Personal Property

“When the parents are gone, there’s all kinds of unforeseen stuff they leave us with, stuff they never intended.” – Ira Glass, in This American Life, Episode 763: “Left Behind”

If you grew up with siblings, you probably remember some sibling rivalry. That rivalry can continue well into adulthood, especially after the parents are gone. In many families, parents are like the glue that keeps the family together. Once their gone, old issues can resurface, especially when it comes to dividing the parents’ personal property.  That’s why it’s important to have a plan for how you want your personal, sentimental property distributed to the people that you love. If you don’t, that can make an already tough situation so much worse.

This American Life, a popular podcast, recently featured a family with such a story. Eleven adult siblings needed to divide their dead parents’ stuff. But they didn’t all get along. Although their parents (who were both attorneys) had wills, they didn’t list in their will which child would get which items. They left all that to the kids, saying simply, everyone should get an equal amount. So the siblings invented a remarkably elaborate cheat-proof system to divide up the remains of their childhood. In the end, it was a system that played off the siblings’ natural suspicions towards each other and did nothing to bring them closer together after losing their parents.

Here’s a quote from the narrator:

“What they have left to them is just these things, right? And this mandate– to get along well enough one last time to split it up amongst themselves. And they don’t want to screw it up. They want to honor their parents’ last request. But they know it’s going to be tough for them, given how they are sometimes with each other.”

This is an example of incomplete planning that can lead to conflict after you’re gone. If the parents in this story had left a personal property memorandum that referred back to their Wills, that could have reduced the strain on their children, especially the estate’s executor. It would have also saved a lot of time and conflict….and their relationships with each other.

You can listen to this story (16 minute run time) here.

Or you can read the transcript here. 

 

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why Myrna offers a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to find out how to get this session at no charge. Call us at (813) 514-2946.

Check out another blog post about embracing the emotional side of estate planning. Here

Update: Aretha Franklin’s Estate. 3 Handwritten Wills Found

In August 2018, music legend, Aretha Franklin, died of pancreatic cancer. At her death, her estate was worth over $80 million and it appeared that she died without a will or trust.  (We wrote about this in this article here.)

Recently, we learned that three handwritten wills were found in her home. The latest one is dated March 2014 and it was found inside a spiral notebook, under cushions. The document appears to give the famous singer’s assets to family members. However, the writing is difficult to decipher and there are words scratched out and notes scribbled in the margins.

It is unclear if this is a valid will under Michigan law.  A court hearing is scheduled next month to determine the validity of that document.

Even if the Court determines that the will is valid, there’s still the issue of federal taxes. The Internal Revenue Service is auditing many years of Franklin’s tax returns, according to the estate. It filed a claim in December for more than $6 million in taxes.

Ms. Franklin’s family remains hopeful that wise choices can be made on behalf of her rich legacy, her family and her estate.  Sadly, we may never know what her wishes were.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents. She ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why Myrna offers a Planning Session, during which you’ll get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Begin  by calling our office today to schedule a Planning Session. Mention this article to find out how to get this $500 session at no charge.

Call us today at (813) 514-2946 to get started.

Will Your Estate Have a Password Problem?

We live in the digital age. Having online access to investments is a great convenience. But the downside is that they can create a very difficult situation for a surviving spouse or executor trying to find the deceased’s assets.

What is the first thing you are told about any password? Don’t write it down. This can create unintended consequences for an executor who needs access to each account in order to marshal the assets and eventually distribute those assets to the heirs or trustees based on the language contained in the will.

When the founder and CEO of a Canadian cryptocurrency exchange, QuadrigaCX, died unexpectedly, nobody else had the password to the exchange’s cold storage locker. That cut off access to investors’ $190 million in cryptocurrency.  Those investors may never see their funds again. This is a an eye-opening example of how the security system designed to keep hackers out of an account can work against the owners of funds.

Estate administration in the digital age requires having a strategy to share passwords to your computer, email and online accounts. Without that, things quickly get complicated.

Option #1 Give your passwords to a trusted family member.

This is probably the easiest, but least secure way. They will need passwords to access your computer or smartphone. They will also need a password to access your email — which is where electronic financial statements are traditionally sent. This creates a potential security issue and also doesn’t provide the trusted person with access to each individual financial platform, which would require each of those passwords to be written down or somehow saved and communicated to the trusted person. Many computer operating systems now save passwords to frequently visited websites, so it is possible that if a trusted person had access to your computer, they may also be able to gain access to your financial accounts.

Option #2 Write down and place all passwords in a safe deposit box.

Your executor or guardian/attorney-in-fact through a power of attorney can access your safe deposit box and your passwords to access your computer, email and financial platforms. This option is somewhat safer than simply writing down and providing passwords to a trusted friend or spouse. But this means you have to be diligent about updating the password list. People rarely keep such printed out lists updated. But if you’re disciplined enough to do this, this might work.

Option #3 Use a digital wallet.

A digital wallet is the most secure and by far the most recommended way to safely and securely store passwords. Like a real wallet, a digital wallet keeps track of all your passwords across all your devices and does so in an encrypted file in the cloud. With this, the only hurdle is the password with which you access the digital wallet.

This would require that you keep a record of the master password somewhere, or perhaps you can agree with your spouse or trusted friend on a pattern of passwords. That could be anything that the two of you can easily remember, along with perhaps a few other characters. It will need to be something that can be remembered and not written down. Writing down and saving passwords should be avoided if at all possible.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why Myrna offers a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to find out how to get this session at no charge.

Call (813) 514-2946 to schedule your Planning Session.

5 Estate Planning Must-Do’s if You’re Getting Divorce. Part 1

Estate Planning Must-Dos if You’re Getting Divorced, Part 1

Divorce can be traumatic for the whole family. Even if the process is amicable, it involves many tough decisions, legal hassles, and painful emotions. Those things can drag out over several months, or even years. How much control do you want your ex to have over your life and assets? If the answer is none, this article is for you.

It’s absolutely critical that you review and update your estate plan—not only after the divorce is final, but as soon as possible once you know the split is inevitable.

Even after you file for divorce, your marriage is legally in full effect until your divorce is finalized. That means if you die while the divorce is still pending and you haven’t updated your estate plan, your soon-to-be-ex spouse could end up inheriting everything. Maybe even worse, if you’re incapacitated before the divorce is final, your ex would be in complete control of your legal, financial, and healthcare decisions.

While some state laws limit your ability to completely change your estate plan once your divorce has been filed, these are some of the most important updates you should consider making as soon as possible when divorce is on the horizon.

1. Update your power of attorney documents for healthcare, financial, and legal decisions

If you are incapacitated by illness or injury during the divorce, who would you want making life-and-death healthcare decisions on your behalf? If you’re in the middle of divorce, chances are you’ll want someone other than your soon-to-be ex making these important decisions for you.

Who would you want managing your finances and making legal decisions for you? In light of the impending split, you’ll most likely want to select another individual, particularly if things are anything less than friendly between the two of you. Again, you have to take action if you do not want your spouse making these decisions for you. Don’t wait, contact us if you know divorce is coming.

2. Update your beneficiary designations

Failing to update beneficiary designations for assets that do not pass through a will or trust, such as life insurance policies and retirement accounts, is one of the most frequent—and tragic—planning mistakes made by those who get divorced. If you get remarried following your divorce, for example, but haven’t changed your IRA beneficiary designation to name your new spouse, the ex you divorced 10 years ago could end up with your retirement savings upon your death.

In most states, once either spouse files divorce papers with the court, neither party can legally amend their beneficiaries without the other’s permission until the divorce is final. So if you’re anticipating a divorce, you may want to consider changing your beneficiaries prior to filing divorce papers. If your divorce is already filed, you should consult with us to see if changing beneficiaries is legal in your state—and in your best interest.

Finally, if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number-one planning priority. In fact, put it on your to-do list right now!

Next week, we’ll continue with part two in this series on the critical estate-planning updates you should make when divorce is inevitable. 

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why Myrna offers a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to find out how to get this session at no charge.

Call (813) 514-2946 to schedule your Planning Session.

Medicare “physical” vs.”wellness visit.” Understanding the Differences Can Save You Money

Medicare covers preventative care services, including an annual wellness visit. But confusing a wellness visit with a physical could be very expensive.

As part of the Affordable Care Act, Medicare beneficiaries receive a free annual wellness visit. At this visit, your doctor, nurse practitioner or physician assistant will generally do the following:

  • Ask you to fill out a health risk assessment questionnaire
  • Update your medical history and current prescriptions
  • Measure your height, weight, blood pressure and body mass index
  • Provide personalized health advice
  • Create a screening schedule for the next 5 to 10 years
  • Screen for cognitive issues

You do not have to pay a deductible for this visit. You may also receive other free preventative services, such as a flu shot.

The confusion arises when a Medicare beneficiary requests an “annual physical” instead of an “annual wellness visit.”

During a physical, a doctor may do other tests that are outside of an annual wellness visit, such as check vital signs, perform lung or abdominal exams, test your reflexes, or order urine and blood samples. These services are not offered for free and Medicare beneficiaries will have to pay co-pays and deductibles when they receive a physical. Kaiser Health News recently related the story of a Medicare recipient who had what she assumed was a free physical only to get a $400 bill from her doctor’s office.

Adding to the confusion is that when you first enroll, Medicare covers a “welcome to Medicare” visit with your doctor.

To avoid co-pays and deductibles, you need to schedule it within the first 12 months of enrolling in Medicare Part B. The visit covers the same things as the annual wellness visit, but it also covers screenings and flu shots, a vision test, review of risk for depression, the option of creating advance directives, and a written plan, letting you know which screenings, shots, and other preventative services you should get.

To avoid receiving a bill for an annual visit, when you contact your doctor’s office to schedule the appointment, be sure to request an “annual wellness visit” instead of asking for a “physical.”

The difference in wording can save you hundreds of dollars. In addition, some Medicare Advantage plans offer a free annual physical, so check with your plan if you are enrolled in one before scheduling.

This article is a service of attorney Myrna Serrano Setty. Myrna does MORE than just draft documents. Myrna ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call us at (813) 514-2946 to schedule a Planning Session.
Ask how to get this valuable session at no charge.

Four Critical Estate Planning Tasks to Complete Before Your Vacation

Four Critical Estate Planning Tasks to Complete Before Your Vacation

Going on vacation involves lots of planning: packing luggage, buying plane tickets, making hotel reservations, and confirming rental vehicles. But one thing many people forget to do is plan for the worst. Traveling, especially in foreign destinations, means you’ll likely be at greater risk than usual for illness, injury, and even death. So you need a solid and updated estate plan in place before taking your next trip.

Without a solid estate plan, your family could face a legal nightmare if something happens to you while you’re away.

#1 Make sure your beneficiary designations are up-to-date

Some of your most valuable assets, like life insurance policies and retirement accounts, do not transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. It’s important that you name a primary beneficiary and at least one alternate beneficiary in case the primary dies before you. Moreover, these designations must be regularly reviewed and updated, especially following major life events like marriage, divorce, and having children.

#2 Create financial and health power of attorney documents

Unforeseen illness and injury can leave you incapacitated and unable to make critical decisions about your own well-being. Given this, you must grant someone the legal authority to make those decisions on your behalf through power of attorney. You need two such documents: medical power of attorney (in Florida it’s called a Designation of Health Care Surrogate) and financial durable power of attorney. Medical power of attorney gives the person of your choice the authority to make your healthcare decisions for you, while durable financial power of attorney gives someone the authority to manage your finances. As with beneficiary designations, these decision makers can change over time, so before you leave for vacation, be sure both documents are current.

#3 Legally Name guardians for your minor children

If you’re the parent of minor children, your most important planning task is to legally document guardians to care for your kids in case you die or become incapacitated. These are the people whom you trust to care for your children—and potentially raise them to adulthood—if something should happen to you. Given the monumental importance of this decision, we’ve created a comprehensive system called the Kids Protection Plan that guides you step-by-step through the process of creating the legal documents naming these guardians. Do you need help choosing guardians? We can support you with that.

#4 Organize your digital assets

If you’re like most people, you probably have dozens of digital accounts like email, social media, cloud storage, and cryptocurrency. If these assets aren’t properly inventoried and accounted for, they’ll likely be lost forever if something happens to you. At minimum, you should write down the location and passwords for each account, and ensure someone you trust knows what to do with these digital assets in the event of your death or incapacity. To make this process easier, consider using LastPass or a similar service that stores and organizes your passwords.

Complete your vacation planning now


If you have a vacation planned, be sure to add these  items to your to-do list before leaving. And if you need help completing any of these tasks—or would simply like us to double check the plan you have in place, contact us now.

We recommend you complete these tasks at least 8 weeks before you depart. However, if your trip is sooner than that, call and let us know you need a rush Planning Session, and we’ll do our best to fit you in as soon as possible. Contact us today to get started. 

This article is a service of attorney Myrna Serrano Setty. Myrna does MORE than just draft documents. Myrna ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call us at (813) 514-2946 to schedule a Planning Session.
Ask how to get this valuable session at no charge.

Seniors and Student Loans

Seniors and Student Loans

The number of older Americans with student loan debt – either theirs or someone else’s — is growing. Sadly, learning how to deal with this debt is now a fact of life for many seniors heading into retirement.

According to by the Consumer Financial Protection Bureau, the number of older borrowers increased by at least 20 percent between 2012 and 2017. Some of these borrowers were borrowing for themselves, but the majority was borrowing for others. The study found that 73 percent of student loan borrowers age 60 and older borrowed for a child’s or grandchild’s education.

Before you co-sign a student loan for a child or grandchild, you need to understand your obligations.

The co-signer not only vouches for the loan recipient’s ability to pay back the loan, but is also personally responsible for repaying the loan if the recipient cannot pay. Because of this, you need to carefully consider the risk before taking on this responsibility. In some circumstances, it is possible to obtain a co-signer release from a loan after the loan recipient has made a few on-time payments. If you are a co-signer on a loan that has not defaulted, check with the lender about getting a release. You can also ask the lender for payment information to make sure the borrower is keeping up with the payments.

If the borrower defaulted and you are obliged to pay the loan back or you are the borrower yourself, you will need to manage your finances. Having to pay back student loan debt can lead to working longer, fewer retirement savings, delayed health care, and credit issues, among other things. If you are struggling to make payments, you can request a new repayment plan that has lower monthly payments. With a federal student loan, you have the option to make payments based on your income. To request an “income-driven repayment plan,” go to: https://studentloans.gov/myDirectLoan/index.action.

Defaulting on a student loan may affect your Social Security benefits.

If you have a private student loan, a debt collector cannot garnish your Social Security benefits to pay back the loan. In the case of federal student loans, the government can take 15 percent of your Social Security check as long as the remaining balance doesn’t drop below $750. There is no statute of limitations on student loan debt, so it doesn’t matter how long ago the debt occurred. If you do default on a federal loan, contact the U.S. Department of Education right away to see if you can arrange a new repayment plan.

What Happens After You Die?

If you die still owing debt on a federal student loan, the debt will be discharged and your spouse or other heirs will not have to repay the loan. If you have a private student loan, whether your spouse or estate will be liable to pay back the debt will depend on the individual loan. You should check with your lender to find out the discharge policies. Depending on the loan, the lender may try to collect from the estate or any co-signers. In a community property state (where all assets acquired during a marriage are considered owned by both spouses equally), the spouse may be liable for the debt (some community property states have exceptions for student loan debt).

For tips from the Consumer Financial Protection Bureau to help navigate problems with student loans, click here.

Attorney Myrna Serrano Setty doesn’t just draft documents, she helps you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why our firm offers a Planning Session. The Planning Session helps you get more financially organized than ever and helps you make the best choices for the people you love.  Start by calling us today to schedule a Planning Session and mention this article to learn how to get this valuable session at no cost to you.

Contact us at (813) 514-2946 or info@serranosetty.com

Part 2: Questions to Consider When Choosing Life Insurance Beneficiaries

Part 2: Questions to Consider When Choosing Life Insurance Beneficiaries

In the first part of this series, we discussed the first three set of questions you should ask yourself when selecting a life insurance beneficiary. Here we cover the final part.

Choosing a life insurance policy beneficiary sounds pretty easy. Because there’s so much that can go wrong, it can actually be more complicated thank you think!

For example, when buying a life insurance policy, your primary goal is most likely to make the named beneficiary’s life better or easier in some way in the aftermath of your death.  But if you don’t consider all of the unique circumstances involved with your choice, you might actually end up creating additional problems for your loved ones.

Last time, we discussed the first set of questions you should ask yourself when choosing a life insurance beneficiary. Here we cover the remaining three:

Are any of your beneficiaries minors?

Technically you can list a minor child as a life insurance policy beneficiary. But it’s a bad idea!  Insurance carriers will not allow a minor child to receive the insurance benefits directly until they reach the age of majority—which can be as old as 21 depending on the state.

If you have a minor named as your beneficiary when you die, then the proceeds would be distributed to a court-appointed custodian tasked with managing the funds, often at a financial cost to your beneficiary. And this is true even if the minor has a living parent. This means that even the child’s other living birth parent would have to go to court to be appointed as custodian if he or she wanted to manage the funds. And, in some cases, that parent would not be able to be appointed (for example, if they have poor credit), and the court would appoint a paid fiduciary to hold the funds.

Rather than naming a minor child as beneficiary, it’s better to set up a trust for your child to receive the insurance proceeds. That way, you get to choose who would manage your child’s inheritance, and how and when the insurance proceeds would be used and distributed.

Would the money negatively affect a beneficiary?

When considering how your insurance funds might help a beneficiary in your absence, you also need to consider how it might potentially cause harm. This is particularly true in the case of young adults.

For example, think about what could go wrong if an 18 year old suddenly receives a huge windfall of cash. At best, the 18 year old might blow through the money in a short period of time. At worst, getting all that money at once could lead to actual physical harm (even death), as could be the case for someone with substance-abuse issues.

To help mitigate these potential complications, some life insurance companies allow your death benefit to be paid out in installments over a period of time, giving you some control over when your beneficiary receives the money. However, as discussed earlier, if you set up a trust to receive the insurance payment, you would have total control over the conditions that must be met for proceeds to be used or distributed. For example, you could build the trust so that the insurance proceeds would be kept in trust for beneficiary’s use inside the trust, yet still keep the funds totally protected from future creditors, lawsuits, and/or divorce.

Is the beneficiary eligible for government benefits?

Considering how your life insurance money might negatively affect a beneficiary is absolutely critical when it comes to those with special needs. If you leave the money directly to someone with special needs, an insurance payout could disqualify your beneficiary from receiving government benefits.

Under federal law, if someone with special needs receives a gift or inheritance of more than $2,000, they can be disqualified for Supplemental Security Income and Medicaid. Since life insurance proceeds are considered inheritance under the law, an individual with special needs SHOULD NEVER be named as beneficiary

To avoid disqualifying an individual with special needs from receiving government benefits, you would create a “special needs” trust to receive the proceeds. In this way, the money will not go directly to the beneficiary upon your death, but be managed by the trustee you name and dispersed per the trust’s terms without affecting benefit eligibility.

The rules governing special needs trusts are quite complicated and can vary greatly from state to state, so if you have a child who has special needs, meet with us to ensure you have the proper planning in place, not just for your insurance proceeds, but for the lifetime of care your child may need.

Make sure you’ve considered all potential circumstances.

These are just a few of the questions you should consider when choosing a life insurance beneficiary. Consult with us as  to be sure you’ve thought through all possible circumstances.

And if you think you may need to create a trust—special needs or otherwise—to receive the proceeds of your life insurance, meet with us, so we can properly review all of your assets and consider how to best leave behind what you have in a way that will create the most benefit—and the least challenges—for the people you love. Schedule your  Planning Session today.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents. Myrna ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why our firm offers Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call us today at (813) 514-2946 to schedule a  Planning Session. Ask how you can get this valuable session at no charge.

Part 1: Questions to Consider When Choosing Life Insurance Beneficiaries

Part 1: Questions to Consider When Choosing Life Insurance Beneficiaries

Choosing a beneficiary for your life insurance policy sounds pretty straightforward. You’re just deciding who will receive the policy’s proceeds when you die, right?

But it’s a bit more complicated than that. Keep in mind that naming someone as your life insurance beneficiary really has nothing to do with you. Why? Because you should consider how that money will affect your beneficiary’s life once you’re gone.

It’s very likely that if you’ve purchased life insurance, you did so to make someone’s  life better or easier in some way. But unless you consider all of the unique circumstances involved with your choice, you might actually end up creating additional problems for your loved ones.

Here are a few important questions you should ask yourself when choosing your life insurance beneficiary:

What are your goals? 

The first thing to consider is the “real” reason you’re buying life insurance. On the surface, the reason may simply be because it’s the responsible thing for adults to do. But we recommend you dig deeper to discover what you ultimately intend to accomplish with your life insurance.

Are you married and looking to replace your income for your spouse and kids after death? Are you single without kids and just trying to cover the costs of your funeral? Are you leaving behind money for your grand-kids’ college fund? Are you intending to make sure your business continues after you’re gone? Or will your life insurance cover a future estate-tax burden?

The real reason you’re investing in life insurance is something only you can answer. The answer is critical, because it is what determines how much and what kind of life insurance you should have in the first place. And by first clearly understanding what you’re actually intending  to accomplish with the policy, you’ll be in a much better position to make your ultimate decision—who to choose as beneficiary.

What are your beneficiary options?

Your insurance company will ask you to name your top choice to get the money after your death. This is the primary beneficiary. If you fail to name a beneficiary, the insurance company will distribute the proceeds to your estate upon your death. If your estate is the beneficiary of your life insurance, that means a probate court judge will direct where your insurance money goes at the completion of the probate process.

And this process can tie your life insurance proceeds up in court for months or even years. To keep this from happening to your loved ones, be sure to name at least one primary beneficiary.

In case your primary beneficiary dies before you, you should also name at least one contingent (alternate) beneficiary. For maximum protection, you should probably name more than one contingent beneficiary in case both your primary and secondary choices have died before you. Yet, even these seemingly straightforward choices are often more complicated than they appear due to the options available.

For example, you can name multiple primary beneficiaries, like your children, and have the proceeds divided among them in whatever way you wish. Also, the beneficiary doesn’t necessarily have to be a person. You can name a charity, nonprofit, or business as the primary (or contingent) beneficiary.

When choosing your beneficiaries, you should ultimately base your decision on which person(s) or organization(s) you think would most benefit from the money. In general, you can designate one or more of the following examples as beneficiaries:

  • One person
  • Two or more people (you decide how money is split among them)
  • A trust you’ve created
  • Your estate
  • A charity, nonprofit, or business

Do you have minor children?

If you name a minor child as a primary or contingent beneficiary (and he or she ends up receiving the policy proceeds), a legal guardian must be appointed to manage the funds until the child comes of age. This can lead to numerous complications (which we’ll discuss in detail next week in Part Two), so you should definitely consult with an experienced estate planning attorney if you’re considering this option.

Does your state have community-property laws?

If you’re married, you’ll likely choose your spouse as the primary beneficiary. But unless you live in a state with community-property laws, you can technically choose anyone: a close friend, your favorite charity, or simply the person you think needs the money most.

That said, if you do live in a community-property state, your spouse is entitled to the policy proceeds and will have to sign a form waiving his or her rights to the insurance money  if you want to name someone else as beneficiary. Currently, community-property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Next week, we’ll continue with Part Two in this series discussing the remaining three questions to consider when naming beneficiaries for your life insurance policy.

 

The Law Firm of Myrna Serrano Setty, P.A. can guide you to make informed, educated, and empowered choices to plan for yourself and the ones you love most. Contact us today to get started with a Planning Session.

Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session,  during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Planning Session and mention this article to find out how to get this valuable session at no charge.