key to the execution of your estate plan › content › dam › uc › hr › bewelluc...This presentation is for informational purposes only and should not be relied upon for tax
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1 The Family Love Letter TM : key to the execution of your estate plan Created by John J. Scroggin, AEP, J.D., LL.M and co-authored by Donna Pagano, CFP® AXA Advisors, LLC and AXA Distributors, LLC New York, NY 10104 (212)314-4600 GE-2320832 (11/18) (Exp. 11/21)
The Family Love LetterTM:key to the execution of your estate plan
Created by John J. Scroggin, AEP, J.D., LL.M and co-authored by Donna Pagano, CFP®
AXA Advisors, LLC and AXA Distributors, LLC New York, NY 10104 (212)314-4600
GE-2320832 (11/18) (Exp. 11/21)
Presenter
Presentation Notes
Good evening (afternoon), I’m NAME I’d like to welcome you all to our presentation. Today, we’re going to introduce an extremely important Estate Planning document – The Family Love Letter. That name doesn’t sound very legal, does it? Well, in fact, it’s not a legal document. The concept of The Family Love Letter was developed by John J. Scroggin, an attorney practicing in the Atlanta area, and co-authored by Donna Pagano, CFP. One of his specialties is estate planning. Over the years, Scroggin has witnessed the confusion that can be caused by failure to plan, especially failure to ensure that vital information and documents are accessible at the time a client dies or becomes incapacitated — a time when family members are already extremely distressed. That’s why he developed The Family Love Letter. Briefly, The Family Love Letter is a compilation of all the information your family will need at the time of your death, or if you should become incapacitated due to illness or injury.
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Important notes
This presentation is for informational purposes only and should not be relied upon for tax or legal advice. Please consult your tax and/or legal advisors regarding your particular circumstances.The “Family Love Letter” is a federally registered trademark of FIT, Inc.
AXA Equitable Life Insurance Company and its affiliates make no representation or guarantee as to the accuracy, correctness or timeliness of the content contained in any of the web sites mentioned in this brochure. John J. Scroggin, AEP, J.D.,LL.M and Donna Pagano, CFP are not affiliated with AXA Equitable Life Insurance Company or its affiliates.
This material is designed for informational purposes only. Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing transaction(s) or matter(s) addressed and you should seek advice based onyour particular circumstances from an independent tax advisor.
AXA Equitable Life Insurance Company (NY,NY). Distributors: AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable, AXA Advisors, and AXA Distributors are affiliated companies and do not provide legal or tax advice. AXA Distributors, LLC and AXA Advisors, LLC (members FINRA)1290 Avenue of the Americas, New York, NY 10104 (212) 554-1234
Presenter
Presentation Notes
[Read Slide]
GE-101114 (2/15)(Exp. 2/17)
purpose of estate planning
Presenter
Presentation Notes
Our agenda today (this evening) The first thing I want to do is put The Family Love Letter in context by talking briefly about the purpose of estate planning – what makes it important. Next, I will introduce The Family Love Letter and go over what should be included in it and how it can be used. The last section of the presentation will instruct you on how to use The Family Love Letter when it is complete. There’ll be time for questions after the presentation – but if there’s something you need clarified as we go along, please ask. Let’s begin.
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purpose of estate planning
Misconceptions:
Just for the richJust for the oldFundamentally about death and taxes
Purpose is to provide a legacy for the living
Presenter
Presentation Notes
Many people do not have a basic will. The failure to plan is in some part due to misconceptions. First, estate planning is not just for the rich. If you have any assets at all and loved ones who presumably will survive you, then you should have an estate plan. If you’re single, you probably have siblings, nieces, nephews, friends, or a favorite charity. Second, estate planning is not just for old people. Tragedy, in the form of accident or illness, can strike anyone. We all know of people who have died young – some of them perhaps without any plans in place, even a will. If there’s a chance that you may be incapacitated by illness or injury – and let’s face it, that chance is probably greater than any of us is comfortable thinking about – then there are estate planning measures that should be addressed. That being said, when you’re developing an estate plan it’s important to get away from the third misconception – thinking exclusively about DEATH and TAXES. Because if you focus on those two things, you’ll be diverted from what should be the real focus – the living, your loved ones who live on, and your legacy to them. You should focus on protecting your family and their lives going forward. Estate planning is basically for everyone, of all ages. Of course, the more assets one has, the more complex the estate plan may become. But everyone should have a plan.
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purpose of estate planning
Two principal elements of estate planning:
Execute documents that provide for death and/or incapacityProvide information relating to your assets, liabilities and wishes
Presenter
Presentation Notes
READ SLIDE Taking them in reverse order: You should provide all the relevant information concerning your assets, liabilities and your wishes in the event of your death or incapacity And You have to draw up the legal documents that will ensure that your property is passed on or managed and family members are protected – according to your wishes. Time and careful thought needs to be devoted to your estate plan. Remember: Your loved ones have to live with the results of your planning – or failure to plan. That brings me to the subject of the next slide.
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purpose of estate planning
Results of failure to plan:
Can create confusion, family conflictCan lead to dissipation of assets, disposition of property against wishesCan cause payment of excess income and estate taxes
Presenter
Presentation Notes
Without the proper documents in place, a family can be left in confusion upon your death. That’s the short term consequence. Without it clearly spelled out – and legally binding – declarations by you, the stage is set for conflict. Any existing family controversies will play themselves out with your legacy as the battlefield. New disputes are also likely to arise. If you die without a will, for example, your estate can be tied up for a prolonged period of time, legal and administrative fees can be exorbitant, and it is quite likely that your assets will not be distributed according to your wishes. Additionally, especially for larger estates, without careful planning, your estate could be taxed to the maximum and your heirs could be taxed to the maximum. There I go again, talking about taxes. But really – we’re talking about what you may have worked a lifetime to build – do you want it to be decimated by taxes, unnecessary taxes? You want the maximum to be passed on to your heirs – to the heirs you choose, in the proportion you choose.
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The Family Love LetterTM
Compilation of all the information your family will need at the time of your death, or if you should becomeincapacitated due to illness or injury
An inventory with contact information/locations:All your financial papersAll your estate papersAll your personal papersInformation at a time of sorrow and confusion
Presenter
Presentation Notes
Now that you understand the relevance of estate planning and recognize the prominent role that it plays in your future, lets discuss The Family Love Letter. [READ SLIDE]
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the purpose of The Family Love Letter
TM
Provide information at a time of confusion:
Investing and planning are not enough if no one knows about itLack of information adds to distressTime searching for contact information, documentsUnknown policies, accounts can be lost
Presenter
Presentation Notes
With that said, we can focus on The Family Love Letter in greater detail. Simply put, its purpose is to provide information at a time of confusion. A well-developed estate plan can’t help your loved ones if they don’t know about it, if they don’t know where the documentation is located. We’re talking about a time of trauma. The last thing a grieving family, or a family trying to cope with a gravely ill loved one needs, is to have to search for important documents or the many contracts, policies, deeds, decrees, et cetera, that may be necessary to deal with your death or incapacity and to go forward with their lives. Your spouse or other loved ones should not have to waste the time and emotional energies trying to gather material. What’s worse is that there could be assets that they don’t know to look for. Assets can be lost, perhaps permanently. You work hard for your family, you love them – that’s why this document is called The Family Love Letter – you’re putting this together because you do love them and want to save them from confusion and worry, you want things to be able to proceed as smoothly as possible.
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contents
Information can be organized in four sections:
Advisors and Financial InformationInsurance and BenefitsDocuments and Other InformationFamily History and Ethical Will
Presenter
Presentation Notes
The word “inventory” is a good word to describe The Family Love Letter. What sort of information are we talking about compiling in this inventory? Well, let’s start by setting up four categories: Advisors and Financial Information Insurance and Benefits Documents and Other Information Attachments – e.g., Ethical Will We’ll look at each of these categories. What’s coming up is really a series of lists that contain the information and documentation that comprise The Family Love Letter. Many of the documents referred to require storage in a secure location. So remember to include the location of any papers that are not attached to, or in the same place as the letter itself. Remember, the more thorough you are, the easier things will be for your loved ones later on.
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advisors and financial information
People, documents/contracts/deeds, locations
Attorneys, Advisors, Agents, BrokersAll contact information
Investment Strategy and AssetsInvestments, retirement accounts, e.g., IRAs, 401(k), Social Security benefits, property, bank accounts, debts owed to you
Frequent flier milesAirline, number, totals as of (date)
LiabilitiesLoans and financial obligations (mortgages, bank or personal loans, leases, liens)
Credit Card InformationCard types, numbers, statements, Web info, access info
Presenter
Presentation Notes
The first section covers Advisors and Financial Information. Depending on how extensive your financial investments are, this can encompass quite a stack of material. Make a list of all the people who “handle” various legal and financial matters for you. Include complete contact information for them. Provide descriptions of investment strategy and documentation for all your investments, property and debts that are owed to you. Frequent Flier Miles – Read the promotional material and any membership information (the fine print) from the airline. Policies regarding transferability of frequent flier miles vary. Transfer of miles may be restricted – or not allowed at all. In some cases, a probated will or other legal document (such as a court order in a divorce settlement) is required. This is potentially a valuable asset and it’s worth looking into. Information regarding all your credit card accounts.
Next, we come to the Insurance & Benefits section. For every type of insurance you carry, all the policies and information about coverage, premiums and how premiums are paid. If you have payments automatically deducted quarterly from a bank account or charged to a credit card, it’s important to provide that information. Perhaps house insurance, a life insurance policy for a grand child or long term care insurance for a parent. You don’t want a bank account closed or a credit card cancelled that would result in a policy lapse or a default of some kind. For many people, their retirement accounts are their major investment accounts, so you might want to put the IRAs and 401ks in the investment section. That might also apply to any stock or other executive benefits. Either way, make sure to include information about options for survivors (or where to get it). Many of these tax-qualified accounts can be passed along to your spouse or other beneficiary and maintain the tax deferral.
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documents and information
For all documents — date signed (if applicable) and location
Estate PlanningWill, Property List, Living Will, Powers of Attorney
Trust DocumentsInsurance, charitable, minors
Personal and FamilyBirth certificate, citizenship, military discharge, marriage license, divorce decrees, and adoption
Property Titles & DeedsGuardianships, Trustee InformationBusiness and Personal Tax ReturnsBusiness Ownership, Buy-Sell Agreement
Presenter
Presentation Notes
The third section covers Documents & Other Information. Estate planning documents, which we will focus on in the following slides, play a prominent role in getting your estate in order. Trust documents, also known as personal and family documents, are often necessary to claim benefits – or to prevent claims against your estate. Titles and deeds are needed for the disposition of any physical property or goods. If you serve as a guardian or trustee, those papers will be needed to ensure the proper transition of those responsibilities. Your most recent tax returns can help your executor with filing the return necessary to close your estate. If you own a business, the ownership papers and a buy-sell agreement are crucial to protect both your business and your family.
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documents to be created
WillPersonal Property Disposal ListLiving WillMedical Power of AttorneyDurable General Power of Attorney
Presenter
Presentation Notes
Now that we know what trust documents consist of, let’s talk about estate planning documents. [READ SLIDE] Four of these – the will, living will, medical and general powers of attorney – are legal documents. Another – the personal property disposal list – is something you might want to put together to accompany your will. Simply put, one is about what you’ve earned and the other is about what you’ve learned. Let’s now look at each of these documents individually.
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your will
Your will is your final declaration of how your assets — and your family — should be treated after your death
Can serve many purposesProviding information about disposition of assetsChoosing people to make decisions when you are goneCreating trusts for heirs incapable of managing legacyProviding guardians for minor childrenMinimizing state and federal estate taxesReducing state and federal income taxes on heirsMinimizing potential sources of conflict among family members
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Presentation Notes
Your will is your final declaration of how your assets – and your family – should be treated after your death. Everyone’s circumstances are different. There is no “one size fits all” will. If you try to get by with something general, then the results may not be what you intend, and may cause serious problems for your heirs. You spell out the disposition of your assets. You choose people to make decisions – an executor, trustees, that’s applicable. You make provisions for heirs who are too young or who haven’t the mental capacity to manage their inheritance. You choose people to take care of your minor children. You try to structure your bequests so as to minimize taxes. Above all, you try to provide clear guidelines to avoid or minimize family conflict. Some of these situations may never apply to you. Some of them – like providing for minor children, both financially and custodially – may apply for some period of your life. Which leads me to an important point: wills are not “for all time” and should be updated as your circumstances change – naming grandchildren, for example. One final point – In traditional families, even when someone dies intestate, there is likely no question about legal rights to inherit of the spouse and children. In Domestic Partner situations, a will is especially important. Without one, it is likely the deceased’s parents and siblings who stand to inherit. Be sure to consult your legal advisor regarding your personal situation.
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personal propertydisposal list
Directs how personal property should passDetails, picturesReference this document in willEspecially useful for second marriages, mixed families
Presenter
Presentation Notes
The Personal Property Disposal List Many professionals involved in estate planning can tell horror stories about the sometimes wretched wrangling that can result over family heirlooms or other personal property. It can lead to relatives not speaking for years. Making up a detailed list can save a lot of grief. If you want a particular child – or one of your siblings, or a child of theirs, or a friend – to receive a particular item, WRITE IT DOWN. Document these special bequests. Include pictures so there’s no doubt what you’re referring to. Such a list can be referenced in your will and be honored like other bequests. Your legal advisor can explain the rules applying in your state. If you have been married more than once, you may have children by your first marriage who do not live with you. If there’s something in your house you want to give any of those kids, document it. Mixed families – where you have a combination of siblings, step- and half-siblings – necessitate care in spelling out bequests.
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living will
Declaration that you do not desire life-sustaining treatmentwhen there is no significant hope of recovery
Eliminates emotional and financial costs to familyEnsures that the decision is yours
Not traumatized family membersNot doctorsNot hospitalsNot courts
Presenter
Presentation Notes
A Living Will The Supreme Court, in the Cruzon Decision*, ruled that in order to be taken off life support (including intravenous nourishment and fluids), the person must have declared his or her desire before becoming incapacitated. This is not just a concern for older people. Remember: Terri Schiavo was in her 20’s when she became incapacitated. For people who remember the Karen Anne Quinlan case back in the 70’s, she was in her 20’s when she became incapacitated. No one who witnessed the unfolding of the Terri Schiavo case should have to be convinced of the necessity of putting your wishes in writing by drawing up a living will. Even in situations where the family is in basic agreement, having a living will relieves your spouse or adult children of the responsibility to make that decision at such an emotionally fraught time. * 497 U.S. 261, 110 S. Ct. 2841 (1990)
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medical power of attorney
Grants person of your choice power to make medical decisions for you if you are incapacitated by illness or injury
Also known as Durable Healthcare Power of AttorneyDeals with range of medical conditions and treatmentCan be used in conjunction with Medical Directive created by you
Presenter
Presentation Notes
With a medical power of attorney, you choose the person you want to speak for you, other than a spouse or next of kin, when you cannot speak for yourself regarding the whole range of medical treatment. You can make your specific wishes known to this person in advance by providing him or her with a Medical Directive outlining various possible scenarios and what you would want. This document is especially important for Domestic Partners. Without a medical power of attorney, it’s possible that your partner might not even be allowed to visit you in the hospital. The right to make medical decisions for you would likely go to your parents or siblings. (Even in states that presently recognize civil unions, it’s best to be safe and draw up this document.) You should consult your legal advisor regarding your particular situation.
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durable general power of attorney
Grants person of your choice power to manage your assets in the event of your incapacity due to illness or injury
Detailed language needed to assure authority in all desired areasSpecify triggering event
Presenter
Presentation Notes
In many families, a spouse usually automatically assumes this responsibility. However, depending on the complexity of your finances, among other things, your spouse may not be the person best-suited for this role. You may have made joint decisions and your spouse is familiar with your assets. If not, then a trusted financial or legal advisor would be a better choice. Here again, it’s important to be specific so your chosen power-holder really does have all the power you intend. You should also be specific as to when this power will go into effect. What specific medical conditions or injured state will be considered triggering events? How much time should be allowed to elapse? Here again, this document is especially important for Domestic Partners. Without power-of-attorney, your partner may not have any legal standing with regard to your affairs. You should consult your legal advisor regarding your particular situation.
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general information
Safes, safe deposits — keys, combinations, access informationPasswords for computer, e-mail, internet accountsSocial Security numberDriver’s licensePassport #Medicare informationReligious and other affiliations
Presenter
Presentation Notes
After preparing your estate planning and trust documents, you need to fill in some general information. [READ SLIDE] Some of this information may be contained in other documents. But make sure all these items are listed somewhere.
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in the event of
My incapacity…
Living willMedical directivePowers of attorneyGuardianshipsDetails of intentions
My death…
Organ donationBurial/cremationService details — Minister/Rabbi, readings, pallbearersObituary, tombstone, in lieu of flowersCare of petsOther special requests
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Presentation Notes
In the event of your incapacity: Your family needs to know your wishes, the location of your living will and any medical directive, they need to know what plans you may have in place regarding powers of attorney and guardianships. In the event of your death: Many of the items on this list are things that you probably want to discuss with family members ahead of time. Decisions about organ donation have to be made immediately (you can carry a donor card). Be sure your family knows your wishes about this. Details about burial or cremation and memorial services must usually be worked out well before financial matters are addressed. Your family should have ready access to all of this information.
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family history and ethical will
Personal statement for the next generation
Not about what’s in your bank account or portfolioAbout what’s in your heart — intangiblesLegacy of values
Presenter
Presentation Notes
The final section covers Family History & Ethical Will. Just as a regular will is a vehicle for passing on your material possessions, an ethical will is a way to pass on your philosophical possessions, your values, your ideas about what’s important in life, your wishes for the future. As it says in the slide, this is about intangibles – what’s in your heart, not what’s in your bank account. For some people, such a statement of values can actually be the foundation for making estate planning decisions. It might lead you to make specific charitable bequests. In other cases, it’s a way to transmit personal histories – the way a family Bible is passed from generation to generation. An ethical will can be added to or rewritten when you arrive at a milestone in your life or go through a major transition in your circumstances, not just when you’re trying to come to grips with the idea of your own mortality. This is obviously not a required legal document, but such a personal statement from you could mean a lot to your family. You might decide to make your ethical will part of a larger project to gather documents, mementoes, and written statements or letters from everyone, creating a family history.
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after completion
After the creation of the document
List attachments (e.g., ethical will, family info), who has copiesPlacement of documentFamily meeting — forum to discuss contents — advisor(s) present
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Presentation Notes
When everything has been compiled, with any attachments necessary, what then? Who should hold copies? Your spouse or an adult child. Your attorney. Another advisor. Safe deposit box – if so make sure that access information is available. Home safe – combination needed. You may want to present The Family Love Letter at a family meeting, perhaps attended by one or more of your advisors. Whether you have a meeting or talk to people individually, using The Family Love Letter as a starting point, you can open a discussion about issues that many people find difficult to broach. A discussion within your family about the contents of this document may alert you to issues and problems that otherwise might cause conflict later on.
the family love letter –value later, value now
Compiling this information can reveal gaps:Missing documentationNeed to expand investments, coverage
Discussing this information can:Help family prepare for future eventsCreate a more open atmosphere about family plans, needs and goals
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Presenter
Presentation Notes
In conclusion, the creation of The Family Love Letter can be the key to the smooth execution of your estate plan. Everything is listed, everything is accessible. No hunting, no chaos. But there are values to be derived now. You may discover that your papers are incomplete and you have to do some research now to finish this project. This could save you problems during your lifetime. More importantly, when you look at all your investments and policies – and their values, coverage amounts, and so forth – it may become clear to you that policy amounts should be increased, that you should step up contributions to a retirement account, that you should consolidate those IRA accounts, that your beneficiaries should be changed, or a variety of other adjustments you can deal with now. Discussing this material may be a good way to introduce an uncomfortable subject for you and for your family. It can help both you and your loved ones begin preparing for future events. It can help make this process an organic, meaningful, family activity. Families are connected over time by legacies – of both financial assets and family values – that pass from one generation to the next. Creating The Family Love Letter can be a way to encourage openness about a whole range of matters affecting your generation and those that follow. Thank you all for coming.
