Bobby's InSights

Social Security Survivor Benefits in a Divorce Situation

2011-10-28T13:21:00.001-07:00

In a divorce situation where one spouse dies, there could potentially be 2 survivor benefits paid. It is important to designate who you want to manage the money for your minor children if you do not want your ex-spouse to be that person.

Where there are children under the age of 16, the surviving spouse AND the kids would be entitled to separate benefits. If the spouse is under age 60 then he/she would be entitled to 75% and the kids would be entitled to 75%. A “Representative Payee” could be appointed for the kids that could be a different person than the surviving spouse. The Representative Payee can receive and manage the funds being paid to kids. The potential Representative Payee would have to apply to social security to become appointed as the official representative payee and they would also have to go to a face to face meeting at the local social security office to become approved. The surviving spouse could also apply. The ultimate decision rests with the social security office. Therefore, I would want a clear provision stating my client’s intent if this situation were to occur somewhere in his will or trust

Inherited IRA Required Minimum Distribution Rules

2011-10-14T05:06:00.000-07:00

Given that most people these days own an IRA, I often receive questions about these IRAs work after the death of the IRA owner. Here are some basic rules:

1) If you inherit an IRA from your spouse then you have a lot more options then if you didn't. In most instances (under current tax laws) if you inherit an IRA from your spouse, you will probably roll your spouse's IRA into your IRA (however this may not always be the best route, it just depends on your cirumstances).

2) If you inherit an IRA from anyone other than your spouse then you normally need to start taking money out of that IRA by December 31 of the year after the person died. Think about it. IRAs grow tax deferred while you are alive and taxes aren't paid until you take the money out. If someone dies with money in their IRA the IRS stands to lose all the taxes they could have collected if the participant took the money out before they died. The term "Required Minimum Distributions" ("RMD") is the IRS's way of telling you that they want to tax you annually on at least a minimum amount of the IRA you have inherited (i.e. by December 31 of the year after death).

How much you need to take out depends on different factors (was the beneficiary designation form correctly filled out at the financial company? even if they didn't fill it out properly you still have options after the death of the participant to try to fix it. If the forms were correctly completed then you probably can take distributions based on your life expectancy which is usually the best option. The worst case scenario is that you have to take it all out in 5 years which could cause a serious tax hit).

3) Whose tax rate do you use? Whoever receives the distribution puts it on their tax returns therefore you use their rate.

4) If you have inherited multiple IRAs from the same decedent, you may choose to combine life-expectancy distributions for those inherited IRAs and withdraw the total from one inherited IRA.However, you may not combine your RMD's from your own traditional IRA with your inherited IRA. Basically, if you have 3 traditional IRAs where you are the owner and 3 IRAs that you inherited you can take all of your own IRA required minimum distributions from 1 of your own IRA accounts (if you so choose) and all of your Inherited IRA distributions from 1 of the IRA inherited accounts (again if you so choose). You can't take your distributions from just 1 of the 6 accounts. Clear as mud? Don't you love the IRS?

All of the above is not intended to be used as tax advice or constitute legal advice. The above are a description of general issues I see in my practice and is for informational purposes only. Consult your lawyer or CPA if you want specific advice regarding your situation.

Another day another chance to get it right.

2011-09-30T14:30:00.001-07:00

I am writing this blog at 8:18 am in the morning and already today was a good day. Like most other days, driving into work I thought about how this day would look like. Unlike most days, I received a jolt of energy in my heart and no. . .it wasn't from my morning coffee. It came about when I started thinking about the interview I was going to have with one of my clients and how much that interview means to me. I am doing a video legacy project for one of my clients. The purpose of the interview is to record his views on topics ranging from where his grandparents grew up to his favorite movie. I want to ask him what he admires most about his kids and major turning points in his life. I am not sure if my client knows it or not but this interview today is why I started my practice. You see, I never had the opportunity to interview my dad about these topics and there are no audio or video recordings that focused on his reflections about his life. My dad was a humble man but humility has nothing to do with it. I wish someone would have taken the time to interview my dad so I could understand his views now that I am a 40 year old man. I want to give this opportunity to as many people as I can because this gift is priceless. It is why I do what I do. Yes, today is a good day…

Why Does the Name of a Trust Matter?

2011-01-21T13:22:00.000-08:00

As an estate planning attorney, a large percentage of my practice is devoted to creating trusts for my clients. Normally, the name of the trust would be the name of the client along with the date of the trust. For example, my trust reads the "Robert A. Feisee Living Trust dated January 1, 2002". I think that we are missing an opportunity in passing on more than just a sterile legal document when we pick the name of our trust.

A colleague of mine, John Warnick, Esq., is a visionary in this field who has really made me rethink the way I work with my clients. I went to a conference a few months ago where he explained that naming your trust is a great way to pass on your legacy and values to your beneficiaries. It makes perfect sense and I am hoping to implement this technique with my clients this year and hopefully long into the future.

Here is my first draft of my new trust name:

"The Feisee Possibility Trust - This name has been chosen to reflect our family’s heritage and belief that anything is possible if you put your mind to it and you believe in yourself. My mother and father escaped from Iran and came to this country not knowing the language and less than a $100 to their name. They built successful medical practices through hard work and a belief in themselves. I was a young boy who had a dream to play in the lacrosse national championship game and I did it. I had a clear vision of my dream, I practiced every day and I believed in myself. Now I own my own law practice using the same tools that were taught to me by my parents. Don’t ever lose your faith in yourself or your family. You can do whatever you put your mind to. The possibilities are endless. . ."

I think the new name of my trust has a better ring to it than my previous name. I am going to go with that one for now until I think of something better. How about your trust? Do you like the name? Do you think you can put more of YOU into that name?

Capturing and Transferring What Matters Most?

2011-01-20T13:13:00.000-08:00

A few days ago was the 1 year anniversary of my father's death. He battled alzehimer's for over 10 years. This weekend I reflected on some of my most favorite memories of my father and I realized all those memories are in my head. They are not written down or recorded anywhere. My father had a great smile that could light up a room and he told great stories about how he struggled growing up. How I wish I could hear his voice just one more time. The problem is, no ever thought about recording his stories. There was always an excuse (we'll do it later, we don't have a recorder, i'm busy). Those excuses pale in comparison to the powerful impact those stories would have had on me a few days ago.

By chance, I had a conversation with my mother a few months ago where she revealed another of my dad's stories that he never told me. He was a young doctor working in a small "village" hospital. He was in charge of one of the sick wards and he was tired of the lack of funding for the patients' care. The rooms were unsanitary and there was an inadequate inventory of medicine. He became very frustrated with the Hospital Administration's rejection of his repeated requests for better conditions for his patients.

My mom then looked at me in the eye, and with a smile she said. . . "Do you know what your father did for his patients? He went on a Hunger Strike! That's right, he refused to eat until his patients were given adequate care. He almost lost his job, his medical license, basically his whole career over this incident. He was willing to sacrifice it all for what he believed in. Well, it caused such a commotion at the hospital that the higher ups looked at the situation more closely and they upgraded the beds as well as the medicine."

Then my mom looked at me again. . . ."Bobby, what are you willing to do for your clients? Will you be as dedicated as your father?"

I had tears in my eyes when my mom told me that story. It gave me more strength and energy than any amount of money or material assets could give me. This lesson is priceless and it is what matters most about my dad...his integrity.

The scary thing is that I may have never heard that story unless my mom and I happen to stumble on that conversation. These stories are priceless on the one hand, but on the other hand, they are fragile and fleeting if not preserved. One of my missions for the people I work with is to capture, preserve and protect their stories as a guardian. These stories are what life is about. They are real and it is what brings families together during difficult times.

Don't wait until it is too late. Capture your stories now while you can remember and enjoy them!

Estate Planning for Your Children

2010-10-21T09:50:00.000-07:00

Often times, a young couple will call my office when they have had their first child. They tell me "We have a baby now, we need to get our Wills done." When I meet with the parents, I find myself routinely answering the same questions and I see that they have relatively no idea on the issues they should be addressing. When they ask for a simple will, I ask the couple if it is their intention that the COURTS supervise how their child is raised. In some instances, this might be a good thing for the family. In my experience, any time the government is involved with my personal affairs, I find that it increases the expense and time in whatever I do. For example, if the parents have life insurance (which they almost always do), I ask them who they have designated as the contingent beneficiary of the life insurance. Usually the primary beneficiary of a life insurance policy is the other spouse. However, what if something happens to both spouses? Isn't that really why this couple decided to call me. To address the legal issues if something were to happen to both of them. Who would get the insurance money if both spouses were to pass away? Sopme couples say they didn't think about that. Others say they have listed their minor child. Either way, that life insurance money is going to be paid into Court and the Court will decide how the money should be used. I don't like that result. That is why I counsel my clients to look at their options. One option would be to keep the Courts out of this situation and pay the money to a trust where YOU as the parents can decide how the money should be used NOT the Court. Why do you want the money that is supposed to be used for your children to be used instead for court filings, attorneys fees, etc.?

Once we remove the Courts from the equation, the next issue we need to address is how you would like the money to be spent on your child. Issues like education (private school, public, college, advanced degrees, etc), clothing, extra curricular activities. What if the child gets in with the wrong crowd and is now doing drugs. How should this be handled? (tough love, counseling, rehab?).

These issues any others need to be addressed if you want to do the planning right. In my experience, a simple Will does not address any of these issues.

Creditors Might Have Access to Inheritors’ IRA

2010-08-04T09:49:00.000-07:00

A Florida appeals court recently ruled that creditors had access to inherited IRAs previously thought to protected. The court held that when the owner of an IRA dies, the instrument that passes to the beneficiaries is converted into a completely separate account which is then subject to applicable taxes. The law varies by state, and even the Florida ruling could be subject to further action by the state legislature. Given the uncertainty, the most prudent approach is to get proper counseling when designating your IRA beneficiaries and exploring all your options such as designating a trust as the beneficiary of an IRA.

The appellant in Robertson v. Deeb contested an order denying his claim of exemption from an inherited IRA. Upon his father’s death, Robertson could choose to convert the inherited IRA into one of two accounts. Since a single owner did not continually maintain the account, the Florida court ruled that statutory protections that ordinarily protect IRAs from creditors did not apply.

Creditor and tax exemptions for inherited IRAs are still unsettled issues in law. Although the Florida court’s rationale has been adopted by other states (Minnesota, Texas), the court’s ruling has generated controversy that may result in further legislative action in Florida and beyond. At the moment there are over $4 trillion dollars held in IRAs, so related asset protection issues are certain to be common in the near future.

One potential planning option worth exploring is to designate a trust as the beneficiary of the IRA. Although the IRA still converts to a new account type, the creditor protection intrinsic to the trust extends to the inherited IRA. The trust can then be structured so that a named individual has access to the trust without the risk of creditor exposure.

Its Never Too Late for A Priceless Conversation

2010-08-02T09:12:00.000-07:00

My Aunt Pari has been diagnosed with Stage 4 lung cancer and I have been agonizing over how I can help her. Pari was the person who always took care of me as a child. She was basically my nanny. When I was sick she was there to comfort me and give me soup. When I couldn't sleep she would tell me stories about my father and how he worked so hard for us. Pari does not have much in the way of material wealth, however, she has a treasure chest of stories about how my father and mother met and how they overcame great odds to create a true love story.

As an estate planning attorney, I felt like I was not taking care of my family properly. My dad passed away earlier this year after a 10 year battle with Alzheimer's. My dad had a lot of great stories of his own about how he grew up in a small 3rd world village and the challenging situations he often found himself in. I regret that I was never able to record any of his stories before he got sick or how his infectious laugh could light up a room. Once again, I see myself faced with losing an opportunity to capture our family's powerful story from those who built it from the ground up during the 1950's-1970's.

My aunt has been so sick that I felt it was very difficult for me to try and interview her now about our family history and I did not want to further burden her. There was a limiting assumption in my mind that said "its too late to burden your aunt with telling the family stories." I just learned that this assumption was absolutely WRONG.

On the advice of my colleagues from the National Network of Estate Planning Attorneys and the Sunbridge Legacy Network, I decided to push through my fears and I visited my Aunt yesterday. I have been visiting her a lot as of late, but I would just come to her home as a comfort to her. This time I decided to ask her some questions. As she laid on her bed, I laid down next to her with a recorder and asked her to tell me the story again how she would go to the train station to pick up my mom back in the 1960s. My mom would come and visit my dad who lived near the Caspian Sea and it was a big event when she would come to visit. My aunt's eyes lit up and she began describing the train station in great detail and how dedicated my mom was to travel such a long way to see my father. She also told me how the house was so full of life when my older sister was born. She described how my mom had to work almost immediately after my sister was born so they could make ends meet. She said those were difficult times but those were also the best of times. My aunt smiled when she described how everyone would make a fuss over my sister. She then described how life was like when my older brother was born and the trouble he would get himself into (she laughed). Then she talked about me and how happy my parents were when I was born. She gave me insights that gave me tingles that I will treasure forever.

This recording is a Priceless Conversation that no inheritance can match. I hope to have many more and I hope my aunt has the strength to tell them. I wish I had not waited so long to ask her about these stories.

LESSON: I believe most of my clients believe they can "put these conversations off til later" but they are wrong. The best time to have these conversations is NOW. Talk about these memories while they are still clear in your mind so you can enjoy reflecting on them. It doesn't matter if you are 30 years old or 80 years old. These stories are fragile if not properly cared for and are likely to be lost forever. At least I have one story I will share with my kids that they will hear directly from the source. I can't put a dollar figure on this memory and it is a gift from my aunt that I will never forget.

Wealth Reception

2010-07-03T11:17:00.000-07:00

How long does the average recepient of an inheritance wait before they buy a new car? Just 19 days.
This fact provided by the New Car Dealer Association provides great insight into how parents leave their wealth to their kids. I read a book by called the Midas Touch this weekend and I was moved by this statement:

"Character is not improved by the sudden receipt of money. It is revealed by it. Just 19 days before they buy a new car. Do you think thats what parents want their kids to spend their hard earned wealth on? How long does it take for the average inheritance to be spent? About 18 months.

Why do you think this is the case? Probably because the kids are not prepared to deal with the inheritance and the estate planner and financial advisors have not bothered to focus on this idea of wealth reception. We are all so focused on the taxes and transferring the assets from point A to B (which is important and should be part of any good estate plan), but we normally ignore the children and the kids relationships between each other and with money.

Can You Spare a Few Moments of Your Time?

2010-06-29T16:52:00.001-07:00

I ran into a sad scenario recently. A gentleman had a heart attack and had no estate planning documents. His family has to hire an attorney to prove to the government that they can take care of their father and to receive money he is entitled to for his care. While they are waiting for this court order they have to pay another attorney to act as their father's attorney. They also get to pay for the doctor who must submit his evidence to the court. Is this the type of mess you want your family dealing with during this troubling time? An ounce of prevention can go a long way in this situation. I see so many families going to great measures to take care of their families (going to the right schools, buying the latest gadgets, meeting the right friends, finding the right babysitter, etc) but they can't take a few hours to make life easier for their loved ones if something major happens. Wonder why?

One Question Can Make All The Difference. . .(Continued)

2010-06-11T12:00:00.000-07:00

If you recall from my last post, we were right at the point of determining whether Bill Sample's estate plan worked. Bill, a father of 2 with lovely wife Mary, suffered a heart attack at the ripe old age of 45. How well did his estate plan work?
After 2 weeks in the hospital, Bill returns home to his family. However, he is coming home in a wheel chair and cannot feed, bathe or clothe himself. The family's income has now been cut in half with increased expenses. Mary can't afford the mortgage and puts the house on the market at a low price since she can't wait out the bad market. Mary gets behind on the bills, is facing bankruptcy, and the kids are going through an emotional roller coaster. How well did Bill's plan work? Did the documents address or explore any of these issues?

Let's take it one step further and say that Bill died. He has an insurance policy worth $1million that gets paid directly to his wife. A year later the wife is driving down a local highway, distracted by the kids, and kills someone in a car accident. All the insurance proceeds are subject to her creditors and they are indeed taken. Could Bill have structured his plan so that the death benefits would have been protected from Mary's creditors? Yes. What if she were to get remarried. Could Bill's kids get disinherited unintentionally? Yes.

Moral of the Story:
I think it is a critical point to understand WHEN you know whether an estate plan works. Normally, you hire an attorney in Year 1 and receive some documents that you don't understand and have no way of knowing that they will work. You get very little counseling. You then hide the documents somewhere like it is some mystery to be solved sometime in the future by your family in Year 10, 20, etc. Then, you go on with your life thinking you have done the right thing for your family. The problem is that those documents aren't put into action immediately and there are no instant results for you to judge the value of what you paid for.

Be careful about the questions you ask when shopping for an estate planning attorney. Are you shopping for the lowest price documents or sound advice that will save your family from a lot of heart ache? Your call.

One Question Can Make All The Difference. . .

2010-05-23T10:23:00.000-07:00

As an estate planning attorney, I find it odd that I rarely get the following question from the general public: "what are my estate planning options?" You would think that would be a basic question from people who are in the market for estate planning services. That just is not the case. However, I do get a lot of people asking me the following question: "how much do you charge for a will or trust?"

There is a quote I have heard that goes, "the power is in the question." I really believe this quote can be valuable when you are doing your due diligence in hiring an estate planning attorney. The latter question, "how much do you charge for a will or trust?" has the potential to steer your planning to disaster. While the former question, "what are my planning options?" has the potential to steer your planning towards securing your family's future and protecting your loved ones.

Why the dramatic difference in just one simple question? I will use a real life example to illustrate what I mean.

Bill Sample (i am protecting the names of the innocent), decides it is time to go shopping for a will because his college roommate died of a heart attack at age 45. He thinks to himself, if it could happen to Rob, it can happen to me and I better get the right documents in place. He does some basic research over the internet and sees that he can download a will off the internet for $79. He thinks about and decides to call an attorney instead as there may be some stuff that I may miss. He calls a local attorney and says: "My wife and I are interested in doing our wills, how much do you charge for each will?"
Attorney: I charge $250 for each simple will and an extra $150 for a power of attorney and medical directive form, when would you like to come in?
They schedule an appointment for next week, the couple comes in, the attorney obtains their basic information in an hour (name, address, kids names, approximate size of estate, executor's name) and collects the money for the documents. A few weeks later, Bill and Mary Sample pick up the Wills, put them in their safe deposit box, and now Bill feels much better that he has done his "estate planning." He feels has done the right thing for his family and now they can move on with their lives.

10 years later, Bill unexpectedly suffers a stroke. It is a terrible event that shocks the whole family. Even though this is a tragic event, at least Bill had the foresight to do estate planning for himself and his family. At least they have all the legal and financial issues covered, right?

I will continue with this story in my next post. . .

Syracuse Lacrosse. . . A System That Works

2010-04-06T09:25:00.000-07:00

A few weeks ago, I went to my college lacrosse team 20 year reunion of our 1990 national championship team. I played for syracuse university lacrosse and it had been about 10 years since I visited the university. What I found interesting is that the lacrosse program is as successful now as it was when I attended the university. Since I left syracuse, they have won 7 more national titles. How did this program become so successful? What are they doing well that other programs should learn from? I think you can learn a lot from successful organizations, especially about the types of habits they develop.

My return flight from syracuse was delayed and I decided to attend a lacrosse practice to see how the practices have changed since I attended over 20 years ago. What surprised me is that the core or base practice drills the team was running were essentially the same drills I had been taught 20 years ago. We had a specific system and routine that we followed every day and I saw the kids doing the same thing that we used to do. The system produced the consistent results and it was the focus on the system and the mastery of the system that produced these positive and different results. I guess the old adage "if it ain't broke don't fix it" really is true.

I thought about my law practice and about how are firm has developed since we started focusing on our process and our system. Traditionally, law firms do not really have an estate planning process or an identifiable system. Most attorneys are focused on producing documents and their system is basically their computer. When we changed our focus on producing a plan that works for the client WHEN they actually need it to work (disability/death) it is supposed to work, then our system changed. We needed to develop a process to title assets properly, commuicate updates to the clients on a routine basis, educating the family, etc. When we were able to clearly see our goal in this manner, our system started to take form and our team (the law firm) starting focusing on fine tuning our process so that we were producing tremendous results for our clients.
For example, every year we hold a "What to Do" workshop for our clients and their families. What to do when a loved one becomes disabled and What to do when a loved one passes away. We have found that clients and their families don't know the first two things to do when a significant event like disability or death occurs. We initially designed this workshop to address these issues. However, through the years clients have given us consistent feedback that it would be good to have a "Helper's Handbook" that the clients and family members could have in their possession and reference when needed. So our law firm team developed this "Helper's Handbook" and continued to refine it to meet our clients' expectations. So every year, our team practices and focuses on making our " What to Do" programs better and how we can make our handbook better. Focusing our efforts on making the clients life easier helps clarify the law firm goals and brings the team together to create successful plans.

My point is that I belive estate planning is a process and is not just a transaction or document. Some attorneys are more "word processing" oriented and our focused on the documents as the end result, while other attorneys are focused on counselling and the actual plan results (did the plan work smoothly or was it painful, long, expensive process?). We find that we get consistent positive results when we focus our systems on counselling the family. The way we "practice" and refine our system is by constantly looking at our process and asking the following questions:
1) What are we doing well in our planning process?
2) What do we need to improve on or what aren't we doing so well?
3) What aren't we doing that we should be doing?

By objectively looking at our practice and mastering our systems (just like the lacrosse team working on the same drills every day until they master them) we provide consistent results for the clients. Maybe this is a simple point, however, I find that this point is often overlooked.

This blog is not intended to provide tax, legal, financial advice. It is simply a forum to express my opinions of issues that I see on a daily basis.

What is Estate Planning?

2010-02-20T06:44:00.000-08:00

What does "estate planning" mean? Why should I care? Not knowing the answer to these 2 important questions cost my family dearly. If you don't know what it is, why would you bother doing anything about it? Many people think they know what estate planning is: "oh yeah I have a Will or a Power of Attorney or a Trust" but they have no clue what these documents do. They simply know they have some type of document. If you are looking for a document, download it off the internet and save yourself the time expense of using an attorney. However, beware of the consequences to your family. If you don't know what your document does, how can you expect your family to have any clue? People are better consumers when buying a high definition tv as opposed to when they are trying to set up their estate plan. Your estate plan directly impacts your family and all the wealth you have created. It might be a good idea to do your due diligence here. A good first step would be to try to imagine what life would look likefor your family members if you were disabled or if you passed away. I could think of a 1000 better ways to spend my time but if you don't take the time to think about this topic critically, then, in my experience, you will cause considerable emotional and financial damage to your family.

So where would I start? I would define what estate planning means to me. Here is my best definition of estate planning that I use on a daily basis:

I want to control my propery while I am alive and well;
A plan for me and my loved ones if I become disabled;
Then I want to give what I have, to whom I want, when I want, in the way that I want;
All while assuring my wisdom is transferred along with the rest of my wealth.

If one understand this definition and feels comfortable with how their plan works, then I believe you are going in the right direction to protect your wealth and your family. In my next post I will go into this definition of estate planning into more detail and what it means to me. . .

As always, this blog is not intended to be used as legal, tax, and or financial advice. It is simply my perceptions regarding the events that occur in my daily personal life.

Questions the Attorney Should Be Asking. . .

2010-02-04T09:31:00.001-08:00

In my recent posts, I have been reflecting on the death of my father and how his estate planning could have been structured to avoid the disaster our family encountered when he was diagnosed with Alzheimer's. He (and our family) lived with the disease for 12 years. If I had the opportunity to rewind the clock and if I was the attorney handling my father's estate plan, here are some of the questions I would have asked him that were NOT asked:

Attorney: Mr. Feisee, as your attorney I need to prepare a plan that will address your needs immediately. Let's call it "Next Month" Planning. In this regard, I would like to explore some different scenarios with you and get your thoughts.

Dad: Okay, what would you like to ask.

Attorney: If we were to do nothing as far as planning and you were to have a stroke next month, or be diagnosed with Alzheimer's or some other catastrophic illness, can you describe how life would look like for your wife?

Dad: Well, since I own my own business, we would lose all that income. I guess my wife would have the burden of paying 2 mortgages with half the income. As far as my care, I guess she would be responsible for taking care of me as well. I guess she would be put in a very stressful position. Life would be tough, I am not sure how she would get by.

Attorney: Let's fast forward 10 years and say that your wife managed to make ends meet for 1o years while taking care of you. Let's say you pass away at this point. Can you describe how life would look for her at that point?

Dad: Well if she had to take care of me for 10 years, while working and paying all the bills including my medical care, I would say that she would be in a difficult financial position. She would probably have to work another 10 years at least and probably work until the day she died.
After going through 10 years of dealing with my care, I am guessing she would just want a break and take it easy since she is in her 70s. Life would look pretty bleak for her too.

Attorney: Let's look at the other side of the coin and say that we did do some planning and that the plan included things like long term care insurance, diability insurance, and life insurance that would fill the liquidity needs of your spouse and family if these events were to occur. How might life look like then?

Dad: Well if there was money coming in to take care of me, that would lighten the load tremendously. If we could replace my income that would be a tremendous relief to my wife. As far as the life insurance, although I am not a big believer in, I see how it could be the ultimate gift I could give to my wife. I never looked at it this way.

Attorney: Maybe we should explore some options and talk to your advisors about how we can make this work with your budget.

Dad: Good idea.

This conversation could have saved our family over $600,000 in long term care expenses and hundreds of thousands of dollars in lost income and mortgage expenses. Maybe my dad would not have implemented all the ideas, but I think he may have done 1 or 2. Those 1 or 2 items could have changed our family members' lives life tremendously. My mom currently works 8-10 hours a day and she is in her mid 70s. There is no vacation in sight. . .

As always, this blog is not intended for financial, legal, and/or tax advice. It is simply a place where I reflect on my personal life experiences. I am not selling any financial or insurance product; talk to your own professionals for any specific advice.

Make Sure You Get The Family Involved

2010-01-27T13:23:00.000-08:00

I never spoke to my dad's attorney about his estate plan. The plan was put in a drawer and we never bothered to look at it or talk to dad about what he had done. After dad was diagnosed with Alzheimer's, I reviewed the documents and realized that it had nothing to do with my father and the instructions were not clear at all. I should have had the opportunity to discuss what my father wanted directly with my father while he was coherent. I believe an estate planner's role should be to facilitate this type of family involvement. Two critical pieces of an estate plan are clear personalized instructions and family involvement. If you think you are doing your family a favor by not discussing these issues think again. If I could do it over again, I would have discussed the plan with my father and his attorney. I would have asked about the steps I should be taking to help prepare our family and to get our affairs in order beforehand. I prefer a proactive approach to a reactive approach any day. . .

As always this blog does not constitue legal, financial, and/or tax advice. It is simply my perspective on the events that have occurred in my daily life.

Doctor J. Feisee

2010-01-22T12:21:00.000-08:00

My father passed away this weekend after a 12 year battle with Alzheimer's disease. For those of you who are lucky enough not to have encountered the disease I will give you some of my reflections and insights to give you the benefit of my experience. Over the past 10 years our family has spent over $600,000 out of pocket to take care of my father at home. We are a very close family and come from a tradition of taking very good care of our elders. Unfortunately, like most close families we never discussed what life would like if dad became disabled. This is considered to be a "taboo" or unspoken subject. Well I am here to tell you, if you don't talk about it now with your family then you place the burden on them to talk about it at the worst possible time. You also give the family very few options and are mostly left with heartache.

My father never told me about the level of care he desired and how long he wanted this care to continue. We never discussed where the money would be coming from to pay for his care. However, we did have a legal document called an Advance Medical Directive that designated my mom and then myself as his health care agents. This document, in one form or another, is used in virtually all estate plans. The problem is that it is just that, a form. It does nothing but put the legal burden of making health care decisions on your agent. It does not provide any guidance to your agent as to what type of care and level of care you want. It does not tell you where you would like to be treated and for how long. It does not pay for the care. I think most importantly it does not tell your family how much you love them nor does it provide any of your wisdom. It is just a form document.

What things should a family be considering when dealing with disability and death planning? Well, one thing I regret every day is that I did not ever sit down with my dad before his illness to record some of his great stories and experiences that he use to tell us about. My dad came from very humble beginnings and beat significant odds to marry my mom and to become a doctor. He would tell us these stories with a smile on his face that could light up a room. Those precious stories of how he rose through the ranks will never be told by him again. Although, I will do my best to capture and put those stories in my own words, I wish I could listen to him again. I also wish I had a chance to ask him certain questions about major life choices (his thoughts on how to run a business, his experiences and lessons about money, major influences in his life, the values he tried to instill in me and why they were important. When this illness struck, I had recently graduated law school and was getting to a point in our relationship where father-son was becoming father-friend. I dearly wish that I had an opportunity to talk to him again to record his thoughts. When estate planners talk about transferring assets from point A to B, most seem to focus on the material wealth. My father's material wealth was very small compared to the wealth of knowledge and wisdom that he kept inside of him. There is a quote I have heard that states "when an individual passes away, it is like a library burning down." That quote makes a lot of sense to me now.

I also wish I did a lot of other things to prepare our family for my father's disability. As an estate planning an attorney, I believe it is my duty to help families and change people's lives for the better. I will discuss what other actions I would have taken in my next blog. . .

As always, this blog is not intended to give legal advice, tax advice or financial advice. It is simply my reflections on my own personal life events. Any other use of this information is strictly prohibited.

Grief Counselling

2009-05-03T16:15:00.000-07:00

Last week I went to an estate planning conference where one of the keynote speakers specialized in grief management counselling. I think it is a brilliant idea to have this type of speaker talk to estate planning attorneys. Most attorneys do not understand how to relate to a grieving widow who is the going through the most difficult time in her life. These type of counselling issues are not addressed in law schools. However, you will find many courses on probate and tax adminstration of estates.
Do most attorneys have any idea what a widow is going through emotionally during and after the funeral? I believe an attorney must ask himself/herself how they can truly provide support to the family during traumatic events such as disablilty and/death. I think these are the real issues that attorneys should be focusing on in addition to the "default" estate administration issues. I put the word "default" in quotes because I feel that estate settlement issues are poorly addressed with most clients; and families have no idea what steps are involved when a loved one becomes disabled or passes away. I will speak more of this issue in my next post.

INSIGHT LAW BEGINS

2009-01-24T12:48:00.001-08:00

Over the past 2 years my practice has gone through some major changes for the better. First of all, our firm is now called InSight Law. The name actually comes from the negative experience my family has had with estate planning attorneys. The lack of proper planning basically has cost our family $500,000 in long term care expenses to date. My father has been living at home for the past 8 years and the monthly expense for his care is now at $6,000. The estate planning attorney viewed our family as a transaction and basically sold us a document. The financial advisor was barely in the picture and was more worried about his commissions than what my dad really needed. He never talked to us about long term care or any type of insurance for that matter.

My goal in creating InSight Law is to create a counselling experience that peels back the layers and addresses the real issues your family will face. InSight Law is designed to provide families with our InSight and the specific questions families need to be asking their estate planning lawyer. Unfortunately, the majority of families do not know the right questions to be asking in order to be good consumers. It is just going to get worse. Hmm....I wonder where I have said that before. Recall the real estate bust?

This lack of planning will hit us worse because we are even less prepared. That is why I am so confident that InSight Law is on the right track. There are so few us who really care enough to do the right thing for the client. I am excited to be back blogging again. Stay tuned. . .

This blog is for informational purposes and is basically a diary of my daily experiences. It is not intended to be a marketing vehicle or to be used as any type of legal or tax advice.

Recent Trends

2007-06-26T18:39:00.000-07:00

My blog is not to be used as tax, legal, financial or any other business or personal advice. It is simply a forum where I discuss issues that come up in my daily practice so I can reflect on them.

Lately, I have been seeing more lending violations that have occured over the past 2 years. I believe during the lending, refinance, real estate boom/craze, lenders cut a lot of corners. Yes, you can bet that there are now a slew of regulations attorneys can choose from to bring a cause of action against a lender. I think this issue is analogous to the stock boom of the 90's and the resulting litigation that occured following the boom because the financial institutions and the accountants decided to cut corners. The same thing is happening now because many lenders and their local mortgage broker arms pushed many many deals through the closing process; and yes they took advantage of many people who did not understand the loan product they were buying. Be wary of aggressive loan products and read the fine print or you could find yourself with a foreclosure notice on your door.

What the Experts are doing in Real Estate?

2005-10-24T12:55:00.000-07:00

Check out this link to see what real estate mogul Tom Barrack thinks about the market.

http://money.cnn.com/2005/10/21/news/newsmakers/barrack/index.htm

As always this blog is strictly a discussion forum for issues I see in my daily practice. It is not intended to be used as investment, tax, or legal advice. Consult your tax professional or financial advisor before making important decisions.

Thoughts On Lowering My Tax Bill

2005-10-15T12:16:00.000-07:00

This blog is not intended to provide any TAX, LEGAL, or FINANCIAL ADVICE. It is a discussion forum I use to discuss issues I see in my daily practice. If you want tax advice consult your tax professional.

Are you expecting a hefty tax bill this year? You would think that making more money is a good thing but of course you have to make sure you pay the IRS their fair share. Here are some ideas to consider with your tax professional.

1) Pay deductible expenses due early next year before year's end. For example, estimated state tax payments that are due usually by Jan 15 can be paid by Dec. 31 and claimed this year as a deduction.
2) Pay real estate taxes early - if i pay my real estate tax bill that is usually due in February by December 31 of this year, I can deduct this year.
3) Paying my January 1, 2006 mortgage payment by December 31 gives me the ability to deduct corresponding interest this year.
4) If you own your own business you could also think about acquiring an asset you've been thinking about getting before year's end (new laptop, do you need to make any repairs, etc.).

Again, eveyrone's situation is different so consult your tax professional so you can pick his/her brain on these subjects.

Insuring Your Biggest Asset

2005-10-04T16:50:00.000-07:00

This blog is not intended to provide any legal, tax, or financial advice. It is a forum to discuss the daily issues of my practice.

Do you know the limits of your homeowners insurance policy? Many people I meet only have a cursory understanding of their policy. I think it has to do a lot with how people obtain their policy. Usually, a realtor or a mortgage broker will refer you to an insurance company a few days before your real estate closing and it is reflected as a prepay item on your settlement sheet. I also find that most people obtain just the basic coverage so they can keep their closing costs down.

So what does it mean to insure the biggest asset most people have (their home)? If you read your policy it will have your coverage listed on the Declarations Page. Normally, your homeowners insurance will provide coverage for both Property and Liability. Section I of most policies deal with property coverage which includes:

1) the "dwelling"that sits on your land;

2) personal property (subject to exclusions of course) owned or used by a resident, anywhere in the world, up to a certain amount of coverage (usually 50% of your coverage listed in section A of your policy);

3) additional living expenses incurred if your home becomes uninhabitabledue to damage by an "insured peril."

4) Credit Cards (yes up to a certain limit -normally $500)

5) Collapse, BUT only as provided under the additional coverages

6) Breakage of glass or safety glazing material

7) Landlord's furnishings (not the tenant's) in rental property on the premises.

Section II of most homeowners policies deal with Liability. Most people think about liability when it comes to their car insurance but fail to pay attention to liability on their homeowners insurance. Coverage E on most policies will explain your personal liability coverage. The personal liability coverage provides both bodily injury and property damage coverage for "other-than-auto-related lossed (usually up to $100,000). "Other-than-auto-related losses" could cover many things, so if you ever sustain an"other-than-auto-related" loss you probably should take a look at your homeowners policy for possible coverage.

Coverage F explains how much Medical Payments are covered for injuries sustained by third parties.

If you want to know more about what the insurance you paid for on your house covers contact your insurance agent, your financial advisor, or your attorney.
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Incapacity Planning - "Don't Count on the Government for Help" by Robert Feisee

2005-09-20T15:18:00.000-07:00

My father is 76 years old and has alzhemier's disease. He has been seen by doctors at Johns Hopkins Medical school who say that is chances of recovery are almost none. He cannot walk, bathe, eat, dress or go to the bathroom without the help of a nurse. He is rarely coherent and can manage only a few words if he is lucky. I would think that he would fall under the category of being "disabled" by anyone's definition.

The emotional and monetary drain of this disease is probably the single worst thing that has happened to my family. We never expected our father to be in this state and it is hard to watch him deteriorate on a daily basis. Also, we never bothered to obtain long term care insurance so the financial burden of caring for my father rests squarely on my mother.

I called the Social Security Administration(SSA) to see if they can provide some financial assistance since my dad requires a full time nurse. Obviously this is a very big and real expense(ranging over $200/day in Fairfax County, Virginia ).

Long story short, the SSA said they will provide no assistance to my father since he is over 65 years old and has over $3,000 worth of TOTAL assets. If he were younger than 65, he would be ELIGIBLE(and I use the word eligible in the most restrictive sense) to apply for disability benefits. If anyone has ever tried obtaining Social Security Disability benefits then you know that your odds of success are very slim. I would predict that my father, who no doubt is completely disabled, would have a 30% chance of obtaining benefits if he were younger than 65 years old.

Nevertheless, there is a program offered by Social Security that offers assisstance if you are over 65 years old and disabled. It is called Supplemental Security Income (SSI) and it would provide approximately $560/month to help care for the disabled. Although it is only a drop in the bucket, when you are caring for a loved one you need every penny you are entitled to receive. There is a catch with SSI, as you will see with many government programs, that if you are disabled and 65 you cannot own more than $3000 in total assets. This virtually eliminates any individual who ever tried to make something of his life and work for a living. Your reward here is that you are not worthy of health care.

After exhausting the SSA route, I called Medicare to see what help they could offer. Short answer on this one is little if no help. After going over my father's condition with the representative, she told me there was no program that he would qualify under. I asked her that I thought that one of the benefits provided by Medicare is home health care. (By the way, you can get a summary of medicare benefits at www.medicare.gov. The benefits are confusing and illogical so don't get discouraged if you don't understand them. I am an attorney and I found it difficult myself.) The representative corrected herself and said "yes you are right, I meant we offered no 'custodial care." There is a distinction, according to Medicare, between home health care which is "covered" and custodial care(i.e. nursing home) which is not.

My eyes actually lit up when I heard the Medicare representative actually say the words that it was a "covered" benefit. This feeling was quickly dismissed once I discovered the benefits of this "home health care" which are virtually none. Although I have no doubt my father would satisfy the requirements of disability the benefits are not useful. The process is as follows: you basically have to get a letter from your doctor confirming you are 1) disabled; 2) you need medical care at home; 3) you need intermittent skill and speech therapy or physical therapy; 4) you are home bound. Then Medicare puts you in their system to decide if you are worthy.

After you get through all the red tape, you will discover that your benefits aren't worth the trouble you went through to obtain the benefits. Beside the fact that you must use an approved "home health care agency" designated by Medicare, they are only allowed to come to the house for 1 hour visits with restrictions on how they can help my father. Now tell me how a working woman, who does not have the time to stay home full time to care for her husband, is going to really benefit from someone maybe coming 1 hour a day for maybe 3 days of the week. How does that really help? Is this a good use of resources?

In my opinion, long term care and incapacity planning need to be addressed by individuals and planners long before the need arises because the government's solution is no solution at all.

Incapacity Planning by Robert Feisee

2005-09-15T19:10:00.000-07:00

As always, the purpose of this blog is not to solicit any business or offer any investment, legal or tax advice. It is simply a discussion forum for issues that I see in my daily practice.

I want to digress from my latest discussions on real estate to talk about an issue I have seen a lot lately. The issue deals with the expected or unexpected incapacity of a loved one. If life isn't hard enough as it is, try facing when you know you won't be able to make your own decisions in the near future and will not have the abilty to perform what the government calls "Activities of Daily Living" (ADL's - dressing yourself, going to the bathroom on your own, bathing, walking, eating, grooming).

Normally (if there is anything normal in this situation) a loved one has already gone down that road towards incapacity and lacks the judgement to deal with the situation when they come to see me. How does one rationally deal with this situation? I could only hope to have the courage to even face a disease like alzheimer's, let alone devise a plan to protect my family from emotional and financial hardship because of my illness.

I think family needs to play a big role here more than anything to provide the kind of love and support needed to deal with this harsh reality. I think after a family has "circled the wagons" they need to get some good advice on how to deal with this situation. Some of the issues I see are:

1) Management of incapacitated or incompetent person's property - who will do it? what needs to be done legally? can i avoid a lengthy court hearing that could drain the family's resources and morale even more? how do i deal with financial institutions?

2) Managment of an incapacitated/incomptent person's life- who will take care of him/her? who will make the medical decisions or him/her? how will they afford this care? what needs to be done legally? does he/she have long term care insurance? is he/she able to receive governement benefits (which are limited and confusing to discern)?

In my opinion, dealing with incapacity will be a common issue for most households over the next 20 years. In this regard there is a strong likelihood there will be a lack of resources on all fronts (financially, legally and emotionally) to deal with the situation. People are living longer and we will see more people living in an incapacitated state. I believe one of the most important issues today is dealing with the long term care needs of loved ones. This problem will not go away and will hit many families hard unless they address it well before incapacity sets in.

Union Square, San Francisco

2005-08-08T07:56:00.000-07:00

The summer in San Francisco supplies a refreshing change in climate from humid Wasington D.C.