May 15, 2023 Weekly Update

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We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for May 15, 2023

CLICK HERE TO WATCH THE UPDATE

This Week’s Podcast -Why do You Need a HIPAA Authorization?

Listen in to learn how your HIPAA Authorization can connect with your living will or health care power of attorney for information to be shared. You will also learn about the medical information that can be released to an authorized person per HIPAA standards.

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Week’s Blog – Why do You Need a HIPAA Authorization?

Estate plan packages are something we advise all of our clients to think about, and it often starts with a discussion of a will, power of attorney, and if the person needs a trust. However, there’s one element that should never be overlooked: HIPAA authorization forms.

CLICK HERE TO READ THE BLOG

Why You Need a HIPAA Authorization

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Estate plan packages are something we advise all of our clients to think about, and it often starts with a discussion of a will, power of attorney, and if the person needs a trust. However, there’s one element that should never be overlooked: HIPAA authorization forms.

As part of your retirement planning, you must think about the future and what will happen to you if there’s a medical emergency in your life.

What is a HIPAA Form and What Does It Stand For?

When you’re in a doctor’s or dentist’s office, it’s not uncommon to come across a HIPAA form. You’ll need to sign one of these forms, and it’s not always 100% clear as to what you’re signing. 

HIPAA is short for the Health Insurance Portability and Accountability Act of 1996, and it transformed healthcare. A few things to know are:

  • The HIPAA law protects your information so that all medical issues are kept between you and the doctor
  • A HIPAA form allows for the release of the information to certain parties, such as a spouse or children 

Many people assume that if they’re in the hospital, the hospital will have to call and inform somebody. Unfortunately, this is not accurate and that is why we recommend filling out a HIPAA authorization form.

What is a HIPAA Authorization?

There are two different types of HIPAA authorization forms. The first is when you’re switching health insurance providers and need to release your medical information from one provider to the next.

However, we’re going to be discussing the second type of authorization.

The second type of authorization prevents your doctor from divulging information about your medical condition to someone else. You may incorrectly assume that if you’re in the hospital, you can talk to your doctor and your doctor will be able to release your medical information to specific loved ones.

You can connect your Estate Plan and your HIPAA forms. If you cannot communicate and someone needs to carry out your wishes as outlined in your estate plan, they’ll likely need medical information from your doctor. Asking someone to carry out your wishes will place a huge burden on them, and you don’t want them to be unable to obtain information on your current medical condition and prognosis.

Connecting your HIPAA forms to an estate plan can resolve this problem.

Example of Why HIPAA Forms Are Important

In the last year, we’ve had a few “reminders” of why filling out these forms is crucial in 2023.  We had one couple who was fine one day and then the next, the husband had a massive stroke. He could not communicate or make any facial movements.

The doctors stated that the person had the mental capacity to communicate their wishes, but they were unable to physically communicate.

The wife was left with the burden of communicating with the doctors about what she thought her husband’s wishes were. She had to guess what her husband’s wishes were because he didn’t have any of the appropriate documents in place that stated his desires.

A healthcare power of attorney allows you to list one or more people to make medical decisions. The person in our example has adult children, and the wife was extremely stressed out in this situation. 

A power of attorney, living will and HIPAA form that are all connected would have allowed the husband’s information to be shared with the wife and children. Her children could have taken on some of the burden of making decisions if all of these documents were connected.

I have another example of my own. I was talking to an estate planning attorney and had a son who was turning 18 at the time. My attorney reminded me that once my son reached adulthood, I would only receive limited information from doctors. 

If my son had been in a medical emergency, the hospital would not have been able to share certain medical information with me.

My attorney advised me to have my son sign a HIPAA form that authorizes my wife and I to speak with doctors and have them release information to us on his medical condition. We also have a daughter who will be turning 18 shortly and will need her to sign a HIPAA form as well.

Imagine being a parent and not having the ability to speak to the doctors about your child’s medical condition. It’s a scary prospect that also applies to your parents, spouse or anyone who would want you to know about their medical condition.

What Information is Shared When a HIPAA Authorization Form is Signed?

HIPAA forms authorize medical professionals to give your medical information to those listed on the form. The person listed on the form also has a right to request any information from the medical professional.

Is every piece of information shared?

No.

Social Security numbers, dates of birth and other sensitive information are protected. Medical professionals must also act within the HIPAA standard of minimum necessary. These professionals only need to provide you with the bare minimum of information.

Medical professionals do not need to go through all of your medical history. Instead, they need to provide you with enough information to make a decision on the person’s health.

On the HIPAA authorization, there is no need for a notary or witness. You only need to have the person’s signature and the name of the people they are authorizing information to be released to in the event they’re in the hospital.

The form requires:

  • Signature 
  • Date
  • How you want the form to be used
  • Names of who you want to access your information
  • Form timeframe (length of authorization)
  • Ability to revoke authorization

On the HIPAA form, you just state your medical wishes and who will receive information on your behalf. These forms authorize the individual to receive just the minimum info necessary to make a medical decision if you are unable to make it yourself.

If you name someone who you decide you no longer want on the form, you can revoke the authorization, too.

We truly believe everyone needs a HIPPA form. 

Anyone who wants to sign HIPAA forms can contact us and we’ll walk you through the process.  We do not charge for this. You can also consult with your estate planning attorney to have them fill out these forms with you.

Do You Need a Trust in Retirement?

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Estate planning is something we talk about a lot. For many clients, estate plans can be very complicated because it’s an extra step in their retirement planning process. However, we believe that this plan is so important that we talk to each and every client that we have about it – even prospective clients.

We teamed up with Andres Mazabel at Trust & Will to streamline the process for everyone, and it has worked out well for so many of our clients.

Andres was a special guest on our most recent podcast to answer a question many of you may have: do you need a trust in retirement?

Why Trust & Will was Founded

Trust & Will, Andres’ company, was founded five years ago because more than 60% of families do not have an estate plan. Traditionally, financial advisors that wanted to help their clients with estate planning had to use an attorney for this process.

Now, Trust & Will offers estate planning documents in all 50 states, making the process:

  • Easier
  • More accessible
  • More affordable

While Trust & Will doesn’t replace an attorney, they make the process easier for people to set up their estate plans from the comfort of their own homes. You can even update your plan through the platform and consult with some of the attorneys on the Trust & Will team.

If you have 30 minutes to an hour, you can have your estate plan in place, which is something our clients love. By removing the friction and procrastination in estate planning, we find more of our clients have these important documents in place to protect everything they worked for in life.

Documents Everyone Needs in Retirement

One survey found that the biggest gaps people have when working with a financial advisor are:

  1. Wealth transfer advice
  2. Estate planning advice

Unfortunately, there’s a big gap in consumer knowledge of probate, wills and what happens when they’re no longer around.

With all of this in mind, we believe everyone should have a:

In addition, some of you reading this may also need a trust.

Trust vs Will in Estate Planning

Basic will documents outline, on paper and in legal documents, your assets and how you want them to be divided up upon your death. Then in the middle of this is something called “probate.” 

Probate, or the court process of a judge settling the estate, allows the judge to make the decision of what happens to your assets if you don’t have a will. Let’s look at an example of this:

  • You die without a will
  • You have no contact with your children
  • You wish for your assets to be transferred to your fiancée

In the above scenario, your estate would be settled in probate. The judge, who has no knowledge of your family dynamics, will split the assets in accordance with the law, and a large portion will go to the children you haven’t heard from in years.

Of course, your parents and siblings may also receive some portion of your estate.

A trust helps your estate avoid probate.

Depending on the state you live in and the assets you have, you may or may not need a trust. In California, if you have taxable accounts above $184,500 (this figure can and does change), these assets will go through probate.

Without an estate plan, a person who exceeds these amounts would have their assets go into probate and then keep the family in probate for 12 months or more.

You don’t want to keep these assets from your family for a year or more.

A trust can be set up to allow you to direct your assets the way you want and at the time that you want. Additionally, the details of the trust are private, but probate is a public matter that anyone can see.

For example, with a trust, you can:

  • Give your kids all of the funds at once
  • Give your kids a percentage of a fund at certain age or life milestones
  • Set money aside for charity

What You Should Know About Creating a Trust

A trust, in its most simple form, is a legal agreement, in which some ways, creates a legal entity. A revocable living trust is the most common form of a trust, and while you’re alive, you can manage the trust, update beneficiaries and have a successor trustee in place.

When the trustee is no longer around, the successor trustee will step in and then be in charge of executing your wishes for the trust. You have a lot of options on who you can choose as your successor trustee, such as:

  • Family member
  • Spouse
  • Someone you trust

You also have the option of hiring a corporate trustee who you pay to execute the plan that you have for your trust. 

If you have an estate under $5 million, most people don’t need a corporate trustee. However, if your estate is worth more than this amount, it may be worthwhile to use a corporate trustee to manage the trust when you’re gone.

Trusts and estate plans can be modified and adjusted while you’re alive because your plans will change over time.

Example Situation of a Trust in Action

Visualizing the benefit of a trust in retirement is easier with an example. Let’s say that a person has:

  • An IRA with beneficiaries in place
  • A house or vacation home

Logistically, with the houses, they would go through probate if you didn’t have a will in place – if the asset was in your name only. Perhaps the asset was purchased before you were married, so it’s not part of your marital property either.

If you pass away suddenly, the real estate will go through probate because no one else is on the deed.

A trust would “own” the real estate, which transfers the deed of the property to the trust, and in a good number of states, you can do a deed transfer, too. Deed transfers allow you to pass the property to someone else without a trust.

However, a trust ensures that the property is transferred before your death so that you can leave it to someone else via your trust’s plan.

You may also have taxable accounts that would undergo a very similar process, such as:

  • Bank accounts
  • CDs
  • Investment accounts (not under an IRA or Roth IRA)

Proper titling of these accounts (such as having named beneficiaries) can help you protect these assets.

A trust allows you to either transfer the asset to the trust or leave the trust as the beneficiary if you wish. Retirement accounts are often not included in a trust. Instead, these accounts often have a beneficiary listed who takes over an account.

Trusts can also help you with business succession, allowing you to pass your business to someone else or have it liquidated.

Do You Need a Trust?

You may or may not need a trust, but you always want to avoid probate. If you have cash assets that can have beneficiaries added to them, the account avoids probate. However, if you have real estate, a business or other assets that do go through probate, a trust may be in your best interest.

We find that a trust is in your best interest in certain states and not others.

Texas is a state that offers fast and efficient probate, so you likely don’t need a trust if you live in Texas. With that said, we recommend that you take the time to talk to your financial advisor or estate planning attorney to determine if a trust is in your best interest.

Our clients have access to Trust & Will as part of our service, but you can also visit https://trustandwill.com/ to set up your own trust and will online.

If you have any questions about your trust, will or financial future, contact us and we’ll help you in any way that we can.

March 13, 2023 Weekly Update

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We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for March 13, 2023

CLICK HERE TO WATCH THE UPDATE

This Week’s Podcast – Do You Need a Trust in Retirement?

In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the importance of having a trust as part of your retirement plan with Andres Mazabel. Trust & Will provides an “easy and secure” way to create estate plans and settle estates online, with the ability to customize legal documents.

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Week’s Blog – Do You Need a Trust in Retirement?

Estate planning is something we talk about a lot. For many clients, estate plans can be very complicated because it’s an extra step in their retirement planning process. However, we believe that this plan is so important that we talk to each and every client that we have about it – even prospective clients.

CLICK HERE TO READ THE BLOG

Trusts Explained – What you need to know!

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Trusts can be a powerful part of your estate plan, but they’re not a tool that every estate needs to leverage. Do you need a trust? Let’s find out.

What is a Trust?

One of the most common questions we’re asked when working with someone that is in the retirement planning phase of their life is: do you need a trust? And the answer isn’t that simple. A trust may be a way for you to secure your retirement while putting assets in a trust for someone else, but it’s not an estate planning tool for every person or situation.

You can think of a trust as a relationship between:

  • Person that sets it up (grantor)
  • Beneficiary (beneficiary)
  • Person that takes care of the trust (trustee)

An example of a trust can be as simple as:

  • Giving someone $20 
  • Ask the person to give the money to someone else

When you create a trust, you’re allowing the trustee to grant assets, on your behalf, to the beneficiary.

When to Consider a Trust in Your Overall Estate Plan

A trust is not a part of everyone’s retirement planning because it’s really a part of your estate plan. You’ll be creating a trust for someone else, although while you’re alive, you may have access to the trust and all assets within, depending on how the trust was created.

Do you need a trust? No, it’s optional.

But that doesn’t mean that you might not benefit from one. A trust is a good option when you have:

  • Children who are too young to really be a beneficiary
  • Children who are disabled and receiving benefits that they may lose from inheritance
  • Beneficiaries suffering from addiction that may only be granted items in the trust under certain conditions

We also see a lot of trusts being made because the parent of a child isn’t sure that their child’s marriage is going to last, and they do not want part of their estate to go to the ex-wife or ex-husband.

A will distributes the assets out easily in an estate plan, while a trust allows the trustee to manage the estate over time until the beneficiary is ready to receive all or part of the trust.

Trusts are a great way to help divide assets in a second marriage. Perhaps you have children from your first marriage or prior to your second marriage, and you want them to receive a portion of your estate upon your death.

If you don’t have a trust in place, your assets would go to your spouse who may or may not distribute assets to these children.

So, there are a lot of great reasons to choose a trust as a way to strengthen your estate plan. The trust type that you choose will be very important, too.

Most Common Types of Trusts

There are a lot of different types of trusts, and some of these trusts can be very specialized. We’re going to cover the most common types of trusts, but before we do, it’s important to discuss something that is very important for all estate planning matters: probate.

What is Probate and Why You Want to Avoid Probate

When assets are transferred at death, this would be considered probate. A will is, essentially, probate because it helps transfer assets after your death, while a trust can have assets put into it while you’re alive.

Let’s say that you have a house when you die. The house will go through probate and then be given to your heirs.

When assets go through probate, there are drawbacks, such as:

  • Fees 
  • Longer time to transfer the asset

But there are some circumstances where probate may be beneficial. This is not as common, but it can happen.

Revocable Living Trusts

A trust that provides protections for beneficiaries, but they have one key benefit: they’re in existence when you’re alive. While you’re alive, you can place assets in the trust to avoid probate.

Irrevocable Trusts

These trusts are often created for life insurance or charitable donations. Once created, these trusts cannot be modified, revoked or changed after their creation. If an asset is placed in the trust, it cannot be taken out even if your wishes change.

Testamentary Trusts

A very common type of trust that is built into your will. These trusts are only “created” upon your demise, and they’re often in place to protect children that are too young to benefit from the estate just yet.

Special Needs Trusts

A trust for someone that has qualified for Medicaid or Medicare benefits. These trusts are drafted in a way that provides funds to the individual while also ensuring that they qualify for their benefits.

You can also have a trust that is more unofficial but is used when someone is less mature, suffers from a medical condition or is an addict and, at this time, shouldn’t benefit from the trust.

The person can still receive their fair share of the estate, but in the case of an addiction, you can put the share in a trust so that when the child is sober, they can receive assets from the trust. A trustee will often be the deciding factor on whether a special needs trust beneficiary is ready to benefit from the trust.

When a Trust Doesn’t Make Sense for Your Estate Plan

Trusts are a good option for some, but they may not be a good option for others. The times when a trust doesn’t make much sense are:

  • All heirs are doing well with no concerns, in happy marriages, etc.
  • Most of your assets transfer outside of probate, i.e. life insurance, retirement funds, etc.

It truly comes down to the beneficiaries whether a trust is necessary. If you have family dynamics, where maybe an heir is on drugs or gambles, you may want a trust. On the other hand, there are times when a 20-year-old is mature and responsible, so a trust isn’t required.

Choosing a Trustee

Sometimes, choosing a trustee is easy. You have someone in your life that you trust and know will handle your trust accordingly. When you don’t have a clear person that you can trust to handle these matters, then you have a few potential options:

  • Family
  • Friends 
  • Accountant
  • Lawyer 

You can also choose co-trustees where two people are left in charge of the trust.

Deciding on a trustee is very difficult. The trustee may be in their position for 20+ years. A trust can be around for decades, meaning that the trustee is in a vital position where they have to make decisions on distributing money or investing assets so that the trust grows over time.

The trustee may have to tell children “no” when they ask for a distribution.

You have to choose a trustee that you can trust and is very responsible. Since this is a position that the trustee may be in for a long time, they need to be reliable, dependable, in good health and someone that you have a lot of faith in to do the right thing.

Trusts are a complicated form of estate planning, and it’s important to speak to an estate planning professional to help you really determine if a trust is a good option for your estate.If you want to learn more about how to secure your retirement or need help with your retirement planning, click here to schedule an introductory call with us.