The second law of thermodynamics states that:

     “the entropy of an isolated system which is not in equilibrium will tend to increase over time, approaching a maximum value at equilibrium.”

What this means for our purposes is that things are always changing (unless you’ve reached absolute equilibrium, in which case you have my hearty congratulations).  When your life changes, as we’ve established it will, it’s important that your estate plan change with it.  Reviewing your estate plan every 1-3 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for.  Here are 5 key components you’ll want to review:

1.    Fiduciaries

2.       Assets

3.       Distribution and Beneficiaries

4.       Health Care

5.       Legal Updates

If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too.  What seemed best for your family 4 years ago might not be the ideal situation now.  By reviewing and updating these 5 components on a regular basis, and touching base with your attorney, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.

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Do you have a favorite charity or non-profit group to whom you regularly donate either your time or money?  I’m willing to bet most readers have at least one, most likely more than one.  The fact is that people like to give.  It doesn’t matter if you have millions in the bank or live on a modest salary. Denis Diderot, the author of the title quote, had it right.  It’s a good feeling to be able to give happiness to others.

 Whether by volunteering your time in a soup kitchen, fundraising for autistic children, teaching handicapped kids to ride horses, or donating a percentage of your income, a majority of the population chooses to give back to their community in some way.  There are organizations and websites (such as www.volunteermatch.org) dedicated solely to helping us in our charitable endeavors.  And the good news is that a Living Trust can help you continue giving even after your death.

With a Living Trust you as grantor can choose to give any amount of your estate to your favorite charity.  Some people leave a specific dollar amount; others leave a percentage of their entire estate.  And you can name your one favorite charity or divide the amount among many charities.  A Living Trust gives you endless possibilities.  Take advantage of it.

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Having a special needs child, parent, or sibling can be overwhelming under the best of circumstances.  Get government programs and federal financial aid involved and providing for your disabled loved one can seem downright impossible.  Still, the importance of planning cannot be overstated.  And as overwhelming as it can be in the beginning, with the right advisors, the planning process can and should be a relieving and beneficial experience for all. The following article from Kiplinger.com goes a long way toward helping with that process. 

 Author Kimberly Lankford explains the basics of public benefits in plain English—why you need them, and what you need to keep them.  The article is full of good advice, but perhaps the best is to find an attorney in your area who specializes in Special Needs planning.  As Lankford says, laws and requirements vary from state to state, but more importantly, there is no substitute for a knowledgeable expert who will listen to your family’s unique story.

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As parents you hope that you will always be able to provide for your children, but what will happen to your kids if something happens to you?  Creating a Children’s Trust insures that your kids will be taken care of, even if you can’t be there to care for them yourself.

What your children need will depend on any number of factors, including their age, level of responsibility, and interests.  Luckily, there are as many options for children’s trusts as there are kids and situations.

Parents of younger children would likely want to set up a common trust, which allows your Trustee to provide for your children according to their needs as they grow, as well as make sure their guardians have the means to create the most loving and least disruptive transition environment possible.  Parents of teenagers may choose to create individual trusts for each child, encouraging fiscal responsibility with provisions to make distributions gradually over time, and by allowing them to be co-trustee of their trust at a certain age.  And parents of adult children should think about protecting those grown children from divorce or lawsuits with a trust in which the beneficiary has maximum access to trust income, while still under the umbrella protection of the trust as a separate legal entity.

Whatever your situation, your attorney can help you find a way to comfortably provide for your children—and to continue to provide for them when they will need you most.

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Choosing people to serve as guardians of your children is often the most difficult part of creating an estate plan.  Putting it off, however, can have dire consequences.  If you have not nominated guardians it is quite possible that if something happens to you, your children could be put in the care of the state Social Services until a judge can appoint guardians for them. Most parents, even if they don’t know who they do want to serve as guardians, are positive that they don’t want their children to end up in the care of Social Services.

If you are having trouble choosing guardians, knowing what you don’t want can actually be a good place to start. Begin with Social Services, and work backwards from there.  You probably also don’t want your alcoholic uncle to be parenting your children, or your deep in debt cousin.  After some thought perhaps you decide that your aging parents are an option—but only as a last resort.  You might then think that your brother and sister-in-law have a different discipline style than you do, but are loving parents, and are therefore people you are comfortable nominating in a back-up role.  Finally, you might realize that the couple you feel the most comfortable asking to be guardians of your children are your dear friends, the ones you met at the parent’s club, and with whom you spend most weekends and holidays.

Suddenly you not only have a list of guardians and back-up guardians, but you also know that you need to create an anti-nomination of guardians for any abusive relatives that might someday end up as guardians of your children.

Take the time to make a list and talk to your attorney about it. Choosing guardians may be the hardest thing you do as parents, but choosing responsible and loving caregivers for your children is the best thing you can do for them.  And it will give you peace of mind as well.

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Before we move into the second half of January, and move away from the topic of New Year’s resolutions, let’s address one more common, although slightly less so, resolution made each year.  Let’s talk about the small number of brave souls out there who resolve to take their financial destiny into their own hands and start their own businesses.  Not all who make this resolution will follow through with it, and not because they can’t make it, but because they get discouraged.  And who can blame them?  Branching out on your own is a scary venture, especially if you aren’t sure where or how to start.  Making that start is a lot easier if:

1.       You have a plan

2.       You aren’t alone

The following article from Kiplinger.com, Six Steps to Starting Your Own Business, can help you with the first part, and your attorney can help you with the second.

That’s right; your attorney can help you start your business, and in fact should help you start your business.  Although the idea and impetus behind this new venture will be all yours, you should absolutely talk to your attorney about the formal incorporation and formation.  Many attorneys are small business owners themselves, and can also help with the challenging and daunting tasks of structuring and formalizing a business plan.  Once your business is off the ground and making money (as it undoubtedly will) your attorney can help you protect it from creditors and lawsuits. 

With a clear plan, and a friend in your corner, starting a business seems almost too easy.

Need a little more incentive?  Every entrepreneur mentioned in Elizabeth Kountze’s article above was between the ages of 18 and 27 when they started their business.  Few of them had any money or experience when they launched, just an idea and determination.  If they can do it, you can too.

So if you’ve ever considered starting your own business, this is the year to do it.  Make a plan, call your attorney, and take destiny by the horns.

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When it comes to New Year’s resolutions, if half are made about health, the other half are made about finances.  It seems there is always room to be smarter about money; planning for retirement, saving for college, deciding what to do with that home equity.  When it comes to money, we all know there is a mind-boggling array of options.  What you might not know is that planning for your future can help you improve your present, and your estate planning attorney can help you with the following issues:

Retirement Planning: Ask your attorney about the recently developed Retirement Trust, which not only extends your retirement fund past its initial payout date, but gives you more options for distributions.

Saving for College: If you have children who will one day be in college, your estate planning attorney can help you make sure they will have the wherewithal to follow their (and your) dreams for education in the event that anything happens to you. An education trust is the perfect way to provide for your children’s schooling.

Investing for the Future: The future is the business of an estate planning attorney, whether it be protecting your life insurance policy for your family, saving your property from probate fees, or minimizing your taxes.  But you have to take steps NOW.

Prepare for the future by taking action in the present.  And the best part is that creating an estate plan is tax deductible.  This means that saving for future generations is saving for you too.

The year is looking better already!

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Past experience and common wisdom tell us that more than half of the resolutions made each New Year have to do with diet, exercise, and health.  As a society, it seems we are preoccupied with physical fitness and longevity.  As long as health is on our minds, let’s look at it from a legal perspective.  That is, let’s take a look at the Health Care Power of Attorney, also known as the Advanced Health Care Directive.

An Advanced Health Care Directive (AHCD) is a legal document that expresses your wishes for your health care in the event that you are unable to make decisions for yourself.  This means it lets a hospital staff know if you want to be kept alive on life support or not, if you want to receive artificial nutrition or hydration, and if you want to be given pain relieving drugs.  An AHCD also nominates a person to act as your agent and make decisions for if you are incapacitated—very important if you don’t want your health care to be the subject of national debate á la Terri Schiavo.

As long as you’re thinking about the AHCD, why not think about including the name of your primary care physician in the document.  This way you can have the peace of mind of knowing that your agent will have the help and advice of someone who already knows your medical history, a doctor you trust and admire.  Having your own doctor involved in an emergency situation can go a long way towards decisions being made swiftly and with confidence.

Last but not least, how about making a short list of people who should be contacted in case of emergency, along with their phone numbers.  It only takes five or ten minutes to compile, and you will not only have it for legal purposes for your AHCD, but you can also copy it and put it in your wallet, or next to your phone at home… just in case.

There it is, easy and effective.  Now that we’ve got that taken care of, let’s go to the gym.

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