2016 Annual Newsletter

Office Happenings

The Heartfelt Legacy Foundation

We, at the Law Offices of Stephen B. Yim, are committed to serving our community and are happy to report that our Heartfelt Legacy Foundation sponsored a Special Needs Presentation in September of 2015 featuring Nationally-recognized special needs attorney Terrie Varnet. The event was well-attended and Terrie, as always, graciously shared her knowledge and experience with us. We hope to bring Terrie back next year some time. 

The Foundation is also looking forward to coordinating an effort among medical professionals, lawyers, financial planners, and other community leaders to implement an integrated process about quality of life at End of Life that helps families make, honor, and respect end of life choices. Rather than the usual experience of checking a box as part of a legal document, this process focuses on guiding families in determining what quality of life means for each individual, helping to communicate these choices to loved ones and medical professionals, so that choices are honored and respected. Studies evaluating this type of process show significant positive results in that over 90% of individuals make end of life decisions, and well over 90% are honored and respected (as opposed to about 30% of individuals making an end of life decision in communities that do not offer this process, with less than 10% of choices being honored and respected). Guilt, anxiety, and depression go way down in communities that offer this process.

For those of you who have recently come in for a review, you may have received the Heartfelt Advance Care Plan, a booklet put together by our Foundation to help people think about what quality of life means to them, especially at End of Life. This booklet provides thought provoking questions that that will not only help people determine what quality of life means to them, but it can also help them communicate those thoughts to not only their loved ones, but to their medical professionals as well, when they are no longer able to communicate them themselves.

Office Updates

Jennifer Morgado continues her studies at the ABA approved paralegal program at the Kapiolani Community College, which is part of the University of Hawaii Systems. 

As Jennifer looks to developing her skills as a paralegal, we hired Stacie Kauila to join us as our new Administrative Assistant.

Monica Yempuku not only completed her first year of law school at the University of Hawaii, Richardson School of Law, she did so with excellence placing well within the top 20% of her class.

Britta Bourne continues to grow with our firm as she has recently been promoted to office manager.  She now holds the responsibility of making sure we all continue to grow professionally here, committed to excellence with compassion.

Periodic Reviews

Periodic reviews are an essential part of estate planning as everything changes — laws, policies, our ideas, and even family relationships. Reviewing your estate plan from time to time gives us the opportunity to accommodate these changes. My responsibility as your attorney, is to help you communicate your intentions clearly at a time when you can no longer speak for yourself.

Try to think about a conversation you had recently where a misunderstanding resulted, and where clarification was necessary. Now imagine how that conversation would’ve turned out if you weren’t there to clear up the misunderstanding. This is the reason why it’s so important for us to use every means of communication available to us to clearly pass on your intentions. This includes: (1) preparing the legal documents such as a trust and powers of attorney; (2) providing each client with our Heartfelt Will, a booklet where they write their intentions down in their own words and handwriting — like an operating manual for their estate plan; and (3) meeting together with their family (and where appropriate, their professional advisors) to help relay their clear intention and instruction. 

Reviewing your estate plan not only allows us to gain a deeper understanding of each other so we can prepare a more meaningful plan for you, it allows us to get organized. So often we hear that the appointed trustee, after a parent dies, does not know what the parent owned or where documents are located. The review allows us to double check the funding of your trust, check brokerage and bank account ownership records, and review beneficiary designations for retirement accounts and life insurance.

This periodic review becomes particularly more important with regard to retirement accounts in light of a recent Supreme Court Case, Clark v. Rameker where the Court determined that “inherited IRA” lose certain creditor-protection. This means for each of us, that we must pay closer attention to our beneficiary designations.  There are ways to provide creditor-protection for our IRAs that we leave to our spouse and children, and require a collaborative effort among your estate planning attorney and financial planner.

Discounted Powers of Attorney for Your Children Heading Off to College

For the past two years we ran a special for those of you whose children were heading off to college for discounted Powers of Attorney. From June to August, we will prepare a Statutory Durable Power of Attorney and an Advance Health Care Directive for your children for a fee of $395 plus the General Excise Tax. Usually our fee is $850 per a Power of Attorney, but we’ll discount the fee to $395 for both, a savings of $1,305.

If you are wondering whether or not your child needs powers of attorney, you should know that once an individual reaches the age of majority, which is 18 in most states, their parents are no longer entitled to see their child’s medical and financial records, nor are they able to make decisions on their behalf. Once an individual reaches 18, the law classifies them as adults with legal rights to privacy and to govern their own lives. If the unspeakable does happen, and you receive a call informing you that your child is in the hospital unconscious, or in trouble, or in need of your help, a Statutory Durable Power of Attorney and an Advance Health Care Directive can make handling the crisis much easier.

If you would be interesting in finding out more about our Powers of Attorney Special, please contact our office for more information (808) 524-0251.

Three Reasons to Review Your Estate Plan

It seems that good things always come in 3’s. This has been my experience in the new laws that have occurred for us as it relates to estate planning. These significant law changes include the New Statutory Power of Attorney, the Estate Tax Exemption increase, and our new Statutory Creditor-Protection law for real estate.  These three laws have solidified as planning opportunities in the last few years.  If you have not reviewed with us in the past three years, I strongly encourage you to call to make an appointment to see if you want to take advantage of the new laws.

The New Statutory Power of Attorney

This new Hawaii Statutory Power of Attorney (SPOA) was signed into law in April of 2014. The law came about as a result of many financial institutions refusing to accept a legal Durable Power of Attorney. The purpose and intention of the power of attorney is to keep financial matters running smoothly during periods of incapacity, and financial institutions not honoring these powers during these times can cause considerable stress for families.

The State of Hawaii prepared this new SPOA, which every financial institution must accept, in order to help families keep their finances running during periods of incapacity.

We have developed this new SPOA for our clients, and we encourage each of you to contact our office so that we can assist you in making this new SPOA.

The Estate Tax Exemption

The estate tax exemption for 2016 is $5.45 million per an individual, up from $5.43 million last year. This increase reinforces the need to shift tax planning from estate tax planning to capital-gains tax planning.

If you haven’t yet taken time to explore the possibility of eliminating capital gains tax for your children through the Joint Legacy Trust, we encourage you to come in for a review meeting to discuss this in detail. In short, the Joint Legacy Trust can eliminate the potential for capital gains tax to your children should they sell real estate or other appreciated assets at your passing, making the entire estate tax-free to the children (other than qualified retired assets like an IRA). It can also simplify your plan and clearly reflect your intentions.

The New Creditor-Protection Deed

In 2012, the State of Hawaii became one of two states that allows you to hold property in Trust and maintain creditor-protection if one spouse gets sued. Just driving on Hawaii roads these days, with pedestrians, moped riders, bicycle riders, motorcyclists, people on their cellphones, the narrowing of lanes, the building of bike paths, and the fact that most of us are amateur drivers, makes for a stressful experience. If we make a mistake and hit one of these pedestrians, moped riders, bicycle riders, motorcyclists; we can protect our real estate from an overzealous attorney who would like to capitalize on our mistake.

Professional Development

One of our goals at the Law Offices of Stephen B. Yim is to continue to grow and develop, individually professionally, and as an estate planning law firm.  This year our office has designed and will be taking a course called “nonviolent communications” which teaches us to communicate expressing feelings, needs, and requests.  The skills that we look forward to developing in this course will allow us to have more meaningful relationships at home, in the office, and with each client.  Our mission includes helping each and every client make meaningful estate planning decisions, helping these clients communicate these wishes and choices clearly to their loved ones, so that their choices can be honored and respected.  Since our goal is to help communicate our clients’ choices at a time when they cannot speak, it is imperative that we continue to each continue to develop and hone our own personal communication skills.

The legal profession is often criticized for lacking character.  Because of this, we at the Law Offices of Stephen B. Yim take this very seriously.  Because of this we have begun subscribing to a monthly journal from the company Strata Leadership.  The journal focuses on a character quality each month, with the sole purpose of encouraging companies to build character in their organizations.

Reading Recommendations

Being Mortal, Atul Gawande.  Atul Guwande is an M.D. who takes a look at modern medicine’s “over medicalization” and encourages us to get back to the humanity of living a good life, to the end.

Sycamore Road, John Grisham.  Sycamore Road is a novel filled with suspense, intrigue, and family conflict when the matriarch of the family writes his will and immediately afterwards hangs himself from a Sycamore Tree on the family property.

For future reading recommendations, periodically visit: http://stephenyimestateplanning.com/blog.

MAHALO!

Please allow us to express our gratitude to you for allowing us to assist you with your estate planning needs. As a continued service to you, we hope you find the information above informative.  We encourage you to continue to periodically meet with us to review your plan.  We hope to see you soon.

Very Truly Yours,

Stephen B. Yim and Staff

A Conversation About Life

This past year, our office established the Heartfelt Legacy Foundation™, which in turn, purchased the right to associate with Honoring Choices®. This national group is raising awareness about making end-of-life choices, encouraging family discussions so that loved ones’ choices may be honored and respected.

In the coming months, Honoring Choices® Hawaii plans to bring awareness to the Hawai‘i community by providing free seminars, engaging community leaders and training advance care facilitators to engage in planning with individuals to begin the advance care planning dialogue.

In order to bring to the Hawai‘i community a uniform, systematic, normalized process, we look for everyone’s support. Honoring our loved one’s intentions at the end of life, to me, is such a universal desire, that it transcends cultural, economic and social differences; the conversation resonates with every individual.

What’s at risk if we do not engage in these conversations? Needless suffering by the individual and their family members; unknown intentions and choices that cannot be honored and respected; dying in an isolated and lonely place surrounded by strangers (caring strangers, but strangers nonetheless). Stress and guilt, felt by surviving family members, can linger a lifetime.

You will hear more about Honoring Choices® Hawaii. Right now, we can all help by starting the conversation with our own families.


Estate Planning for College Students

I recently received a call from a client who has a daughter attending college on the Mainland. Her daughter had been in a ski-accident and was in the hospital. When the mother called the hospital to find out her daughter’s status, they would not release any information or allow the mother to make any decisions on her daughter’s behalf. You can imagine the mother’s distress, thousands of miles away and helpless.

This situation is all too common. Once your child reaches age 18, you are no longer entitled to see your child’s medical and financial records or make decisions on their behalf. Therefore, it is important for young adults to appoint trusted individuals to make medical and financial decisions in the event they are unable to do so.

Few 18-year-olds consider the need for an estate plan, because most have little in the way of property. But if your child were to suddenly lose the ability to make or communicate decisions, they would need a an authorized person to make decisions for them. Your college student will want to consider two important Powers of Attorney:

An Advance Health Care Directive gives you the ability to act on your child’s behalf with regard to medical decision-making in the event that your child is unable to do so.

A General Durable Power of Attorney gives you legal authority to act on your child’s behalf regarding financial matters, regardless of whether they are able to make decisions on their own or not. It may be used in matters of both emergency and convenience.


Lost in Translation

Did you play the game “grape vine” as a child? You whisper something to someone who whispers it to another, until the last person gets the message. The last person says the message out loud. At best, it is a very garbled version of the original message.

Think about estate planning. People tell their attorney the underlying reasons for wanting an estate plan. They share concerns for their loved ones and hopes for their future.

The attorney then translates these heartfelt wishes and intentions into legal language and writes an estate plan. It’s like speaking English to someone and asking them to write down the conversation in French. However, the translator only knows scientific French words. He gets the jist of the conversation, but fails to translate the full meaning and intent. Some of the meaning and intent is lost.

After the client dies, the trustee and beneficiaries try to understand the purpose, reasons, and meaning of the estate plan, only to find hard-tointerpret legal documents.

This grapevine way of making one’s estate plan leads to misunderstanding, lack of clarity, and different interpretations can lead to fractured family relationships. The only people who can clear up any misunderstanding and define their values and meaning are gone — often estates become “lost in translation” experiences.

We need to get away from the grapevine method of estate planning and start having family meetings to relay our intentions clearly while everyone is here — to ensure a successful estate plan.


History, Herstory, Yourstory

One Sunday morning, a few years back, I was out driving on the North Shore, headed to Starbucks for my morning cup of coffee. The traffic wasn’t light, as it was surf season, which means it was pretty crowded with only one lane going in each direction. I noticed in my rearview mirror that there was a car weaving in and out of traffic, passing other cars and speeding. As the driver passed me, I remembered getting angry at this impatient and disrespectful driver. I continued to observe the driver as they sped ahead, weaving in and out of traffic, until the car finally disappeared. I couldn’t imagine anyone more selfish and crazy, making it so dangerous for everyone else just because of their impatience…until I got to Foodland where Starbucks was. You see, across the street was a fire station. And there was the crazy driver — at the fire station. Their passenger was seated, surrounded by firemen who were taking the passenger’s blood pressure. As I entered Starbucks, I could hear an ambulance driving away from the fire station.

This new year, you might be considering making or updating your estate plan. When you do, please do not rely solely on the legal plan to pass your intentions on. Where appropriate, please take the time to discuss your intentions with your family, and write them down. You are the custodian of your wishes, intentions, and memories. We cannot afford misunderstanding, or to completely lose them when you are not able to express or explain yourself. The estate plan, in a way, is your story and belongs only to you. Please do your best to clearly share your story.


2015 Annual Newsletter

OFFICE HAPPENINGS

THE HEARTFELT LEGACY FOUNDATION

We, at the Law Offices of Stephen B. Yim, are committed to serving our community, so on September 8, 2014, our office created a public charity called the Heartfelt Legacy Foundation. The foundation’s main purposes are to: (1) provide information to families with children with disabilities by hosting annual seminars and workshops with nationally recognized speakers who specialize in Special Needs Planning; and (2) to implement a process called Respecting Choices® in Hawaii. Respecting Choices® in a nationally recognized process that helps families make, honor, and respect end of life decisions.

GOING PAPERLESS

We have decided as an office, to reduce the amount of unnecessary papers and files.  Many reasons have led us to this decision, including: (1) the cost of storing files; and (2) the security risk of maintaining physical files of personal information.

We will no longer be maintaining any paper documents (either originals or copies). May we strongly suggest that you review your estate plan and keep your documents in a safe and secure place.  Please notify our office if you cannot locate your original estate plan.

STAFF UPDATES

Last year, Jennifer Morgado joined us as our Administrative Assistant as Marie Yempuku left us to attend law school in Utah. Jennifer is currently attending the ABA approved paralegal program at the Kapiolani Community College, which is part of the University of Hawaii Systems. 

Our office manager, Monica Yempuku will be returning to school this fall in pursuit of her law degree at the University of Hawaii, Richardson School of Law.

Britta Bourne has taken on a fundamental role in coordinating efforts in bringing Respecting Choices to Hawaii.  She is also currently enrolled in the Advance Care Planning course to become a certified administrator of Advance Care Planning.

PERIODIC REVIEWS

Periodic reviews are an essential part of estate planning as everything changes — laws, policies, our ideas, and even family relationships. Reviewing your estate plan from time to time gives us the opportunity to accommodate these changes. My responsibility as your attorney, is to help you communicate your intentions clearly at a time when you can no longer speak for yourself.

Try to think about a conversation you had recently where a misunderstanding resulted, and where clarification was necessary. Now, try to imagine how that conversation would have turned out if you weren’t there to clear up the misunderstanding. This is the reason why it’s so important for us to use every means of communication available to us to clearly pass on your intentions. This includes: (1) preparing the legal documents such as a trust and powers of attorney; (2) providing each client with our Heartfelt Will, a booklet where they write their intentions down in their own words and handwriting — like an operating manual for their estate plan; and (3) meeting together with their family (and where appropriate, their professional advisors) to help relay their clear intention and instruction. 

DISCOUNTED POWERS OF ATTORNEY FOR YOUR CHILDREN HEADING OFF TO COLLEGE

Last June we ran a special for those of you whose children were heading off to college — whether mainland or local college — for discounted Powers of Attorney. We will be running a similar special this year. From June to August, we will prepare a Statutory Durable Power of Attorney and an Advance Health Care Directive for your children for a fee of $395 plus the General Excise Tax. Usually our fee is $500 per a Power of Attorney, but for the month of June we will discount the fee to $395 for both, a savings of $605.

If you are wondering whether or not your child needs powers of attorney, you should know that once an individual reaches the age of majority, which is 18 in most states, their parents are no longer entitled to see their child’s medical and financial records, nor are they able to make decisions on their behalf. Once an individual reaches 18, the law classifies them as adults with legal rights to privacy and to govern their own lives. If the unspeakable does happen, and you receive a call informing you that your child is in the hospital unconscious, or in trouble, or in need of your help, a Statutory Durable Power of Attorney and an Advance Health Care Directive can make handling the crisis much easier.

If you would be interesting in finding out more about our Powers of Attorney Special, please contact our office for more information (808) 524-0251.

THE BIG THREE LAW CHANGES

It seems that good things always come in 3’s. This has been my experience in the new laws that have occurred for us as it relates to estate planning. These significant law changes include the New Statutory Power of Attorney, the Estate Tax Exemption increase, and our new Statutory Creditor-Protection law for real estate.

THE NEW STATUTORY POWER OF ATTORNEY

This new Hawaii Statutory Power of Attorney (SPOA) was signed into law in April of 2014. The law came about as a result of many financial institutions refusing to accept a legal Durable Power of Attorney. The purpose and intention of the power of attorney is to keep financial matters running smoothly during periods of incapacity, and financial institutions not honoring these powers during these times can cause considerable stress for families.

The State of Hawaii prepared this new SPOA, which every financial institution must accept, in order to help families keep their finances running during periods of incapacity.

We have developed this new SPOA for our clients, and we encourage each of you to contact our office so that we can assist you in making this new SPOA.

THE ESTATE TAX EXEMPTION

The estate tax exemption is now $5.43 million per an individual, up from $5.34 million last year. This increase reinforces the need to shift tax planning from estate tax planning to capital-gains tax planning. President Obama, in January of this year, suggested that we increase the capital gains tax rate from 15% to 28%.

If you haven’t yet taken time to explore the possibility of eliminating capital gains tax for your children through the Joint Legacy Trust, we encourage you to come in for a review meeting to discuss this in detail. In short, the Joint Legacy Trust can eliminate the potential for capital gains tax to your children should they sell real estate or other appreciated assets at your passing, making the entire estate tax-free to the children (other than qualified retired assets like an IRA). It can also simplify your plan and clearly reflect your intentions.

THE NEW CREDITOR-PROTECTION DEED

In 2012, the State of Hawaii became one of two states that allows you to hold property in Trust and maintain creditor-protection if one spouse gets sued. Just driving on Hawaii roads these days, with pedestrians, moped riders, bicycle riders, motorcyclists, people on their cellphones, the narrowing of lanes, the building of bike paths, and the fact that most of us are amateur drivers, makes for a stressful experience. If we make a mistake and hit one of these pedestrians, moped riders, bicycle riders, motorcyclists; we can protect our real estate from an overzealous attorney who would like to capitalize on our mistake.

MAHALO!

Please allow us to express our gratitude to you for allowing us to assist you with your estate planning needs. As a continued service to you, we hope you find the information above informative.  We encourage you to continue to periodically meet with us to review your plan.  We hope to see you soon.

Very Truly Yours,

Stephen B. Yim and Staff

After the Pause

I like to call our meeting room where we meet to discuss estate planning “the pause room.” When we enter and close the door, and leave outside all the busy-ness in our lives — we put only the matters relating to estate planning on the table. We pause for about an hour, and concentrate solely on one very important matter.

When we come out and re-enter the busy-ness of life, it’s easy to forget what we just discussed in “the pause room.” After completing the estate plan, your attorney might provide a letter suggesting that certain assets be directed to, or placed into trust. This is called “funding” the trust — it is just as important as creating the trust in the first place, and making sure that the right beneficiary receives the right asset. Funding is either by beneficiary change or by change of title. Assets that usually require change by beneficiary include: life insurance, retirement accounts and annuities.

The assets that commonly require changes to title include: real estate and brokerage accounts.

Each asset is a little different, and while the instructions from your attorney might be clear, we often put them aside or plain forget to do the funding because there are so many other things pulling and tugging for our attention.

This is why it is essential for the attorney, financial advisor and the client to work together “after the pause” to ensure that each asset is properly directed to, or placed into trust, and that written confirmation is received from the financial company or other institution ensuring that the change was properly made.

It's Like Going To The Eye Doctor

When we go to the eye doctor to get a new prescription, the doctor will have us look through many different lenses, constantly asking us which lens provides us with the clearest vision. Much like the eye doctor, I believe that the role of the estate planning attorney is to provide you with estate plan options that most clearly reflect your vision for your plan. You see, both estate planning lawyers and eye doctors strive to provide clarity.

Estate planners must focus on three points for their clients: speaking clearly must accurately communicate your wishes and intentions to your fiduciaries and beneficiaries so what you intend is honored and respected; and making sure your written plan precisely mirrors your wishes.

When you seek counsel to pass on your estate, I believe you are asking for more than written legal documents like a Will and Trust. When you go for new glasses, you need more than frames. Proper lenses bring everything into focus.

Peace of mind comes from a sense that your written estate plan documents safely pass on your legacy, minimize tax, avoid probate, and prevent family fights. Perhaps you are concerned about also protecting the assets from creditors, predator or ex-spouses. Your plan has to be specific enough to speak clearly for you when you no longer can.

Your attorney must first look and listen attentively to understand your hopes and goals; then offer you options that create an estate plan that your heirs can read and understand without questions or doubt. When the prescription is perfect, and the glasses fit, it’s easy to see your way.


Our Story

I have had the great fortune to be able to go on a cruise this summer with my family and visited many different places in Europe.

We barely heard any English spoken on this trip and while the languages are varied, I’ve noticed more commonalities than differences among the people we’ve had the privilege of meeting during our travels.

These commonalities include (1) the love of family as I hear universal laughter coming from parents and children, (2) enjoying freedom other countries may not yet enjoy, including the freedom of speech, to vote, to drive and (3) a desire to tell one’s story.

Fittingly, the person’s name assigned to help us during our cruise in the Mediterranean is Story. We visited museums in Paris, the incredible ruins in Pompeii, and the young democracy in Tunisia. In each place, I noticed that the people have a desire to tell one’s story, through pictures, writing,\ and oral history.

Estate planning, to me, is much more than leaving cash to someone. Cash is so quickly gone. It is one’s legacy that continues on.

I believe that this legacy, your story, is just as important as the legal estate plan leaving assets by way of will or trust and have created what I’ve coined “My Heartfelt Will.” Please consider taking the time and giving yourself permission to write your story.

I encourage you to consider writing your legacy down, the memories and experiences that continue to shape your lives. Are you considering making your estate plan this summer?


The Joint Legacy Trust

If you answer yes to the following 5 questions, consider a Joint Legacy Trust:

(1) Are you married?
(2) Is your marriage a partnership?
(3) Are your children from the same marriage?
(4) Do you have separate trusts?
(5) Do you own a home?

With the new $5.34 million estate tax exemption only about 0.14% of us will pay an estate tax.  Owning a home and passing it to your children could cause a capital gains tax, and Congress is increasing Capital Gains Tax Rates.

Making a joint trust not only reflects and mirrors your life as a partnership, other benefits include: simplicity, flexibility and reducing capital gains tax.

The Joint Trust offers simplicity in that it eliminates the need for obtaining a Federal Identification Number and filing a trust income tax return when the first spouse dies; flexibility to accommodate change after the first spouse's passing; and reduces capital gains tax by taking advantage of a "step-up" in basis, coined "freebasing by Forbes Magazine.*

Separate Trusts were prepared when the estate tax exemption was $600,00 per spouse and helped to reduce estate tax.  With an exemption of over $10 million per couple, most of us will not pay an estate tax, and our children may pay capital gains tax unless we change to a Joint Legacy Trust.

*Forbes Magazine, March 2014: "Freebasing your Estate".  If you would like a free copy of this article, please call me and I will be happy to send you a copy.

Backwards Planning

In my 19 years as an estate planning attorney, I’ve noticed that many of the things we do as attorneys seem backward. The consequence of backward estate planning is dire, causing failed estate plans and fractured family relationships. To ensure a successful estate plan, we must reverse the way we view many of the common estate planning practices:

  • “Read the Will” prior to, not after, someone dies. In a family meeting, discuss your estate plan. What better time to reveal and clarify intentions than when we are alive.
  • It is not solely the document that makes up a sound estate plan, it is the underlying intent that provides the foundation for each document.
  • Start with “why”, then get to the “how” and “what.” Often lawyers want to rush into telling people what to do without exploring the client’s desires and hopes. If we don’t start with asking why the client wants to complete a plan, the what and how will miss the mark.
  • Stop the tail from chasing the dog. Meaning, lawyers often prioritize artificial tax planning over spending time in the relational aspects of estate planning, only to see that while we may minimize taxes, relationships fail.
  • Mend relationships now. We often avoid strained relationships, and leave it to the estate plan to speak to fractured relationships. While some relationships are not “fixable,” now is the time to try.
  • What is most important is not only equal distribution of assets to our children, but also preserving and nurturing the relationships between those we leave behind.
  • We might feel that it is only the worth (dollars and cents) of our assets that is important. However when pressed, most of us feel it is the value (emotion/relational) of our gift that is our most important legacy.
  • Change “I just completed my plan, now I’m done” to: “I just completed my plan and now I’m ready to start.” Once you’ve signed your estate planning documents, I believe you’ve just started the estate planning process because life changes. Now you’ve committed to something that you can review as change occurs.
  • It’s not an entitlement to receive an inheritance. It’s a loving gift.
  • “It’s family so we don’t have to write legal instructions.” It is because it is family, there is much at stake. The clearer the communicate, the better chance for a successful estate plan.

2014 Annual Newsletter

I recently received a call from a client who has a daughter attending college on the mainland.  She had found out that her daughter had been in a ski-accident and was in the hospital.  When the mother called the hospital to find out the status of her daughter, the hospital would not release any information and did not allow the mother to make any decisions on her daughter’s behalf.  You can imagine that stress that this caused the mother, being thousands of miles and hours away from her daughter.

This situation is all too common and easy for families to overlook when children leave for college.  Once your child reaches the age 18 you are no longer entitled to see their child’s medical and financial records or make decisions on their behalf.  As a result, it is important for young adults to appoint trusted individuals to make medical and financial decisions in the event they are unable to do so.

Few 18-year-olds consider the need for an estate plan, simply because most have little in the way of property. But if your child were to lose the ability to make or communicate decisions, medical professionals might refuse to consult with or even release information to you.  Without proper documents, parents generally can't access a child's financial accounts, either.

When a child leaves home to attend college, whether it be in the US or abroad, many parents fear a call from law enforcement, a hospital, or their child’s friend, informing them that their child has been in an accident or an emergency has occurred. Chances are that most of the calls you will receive from your child during the four years they are away for college will be happy, and will involve a request for money. If the unspeakable does happen and you receive a call informing you that your child is in the hospital unconscious, in trouble, or in need of your help, there are things you can do now to make handling such a crisis much easier. Even in situations that are not emergencies, the options discussed will facilitate actions that need to be taken.

There are two important Powers of Attorney your child will want to consider making:

An Advance Health Care Directive gives you the ability to act on your child’s behalf with regard to medical decision-making, if your child is unable to do so. 

A General Durable Power of Attorney gives you legal authority to act on your child’s behalf, regarding financial matters, regardless of whether they are able to make decisions on their own or not. It can be used in matters of both emergency and convenience.

During the month of June, I am extending an invitation to anyone who would like to have a Durable General Power of Attorney and Advance Directive prepared.  My usual fee for these is $500.00 per Power of Attorney (one for health care matters and one for financial matters).  However, for the month of June, I will prepare both of these for a total of $375.00 plus the General Excise Tax, for a savings of $625.00.

For those of you who have not yet taken advantage of the new State of Hawaii law affording creditor-protection for property transferred to a Revocable Trust, I will prepare and record these deeds for $250.00 plus the recording fee and the General Excise tax, a saving of $250.00 off of my usual fee for deed work of $500.00.

REMINDER:

As a gently reminder, please also keep in mind that if we have not seen you in the past three years, or you have experienced any significant changes in your life, please schedule a review appointment.

And, if you or someone you know has separate trusts, one for each spouse, please consider discussing the Joint Legacy Trust as an alternative.  I discussed this in the 2013 Newsletter, and a recent article in Forbes Magazine addresses this. 

The new estate tax law and the creditor-protection deed law favor married couples, and these new favorable laws provide married couples who consider most of their assets as jointly-owned a never-seen-before opportunity to (1) save thousands of dollars in potential capital gains tax; (2) simplify their estate plans; and (3) secure creditor-protection for their Hawaii real estate.  Please call my office to come in for a free consultation to see if this Joint Legacy Trust is right for you.

Please find enclosed a complimentary copy of the Forbes Article.

Thank You for allowing me to help you with your estate planning needs.  We are constantly looking to improve the way we assist families with not only creating meticulous estate planning documents, we also strive to help our clients make informed decisions for all phases of life – from wellness, to diminished capacity, to incapacity, to end of life decision making, and finally passing on.  We not only look to assist clients in communicating their instructions, we also want to help clients pass on their intentions and reasons for making their plans.  And, we also want to help our clients’ Trustees, advisors, and beneficiaries clearly receive these instructions and intentions: to honor and respect our clients’ decisions, to make life easier for their loved ones and to preserve family relationships.

Legal: Siblingship

siblingship [sib-ling-ship]
noun (November 9, 2013):
1. The state of being related or interrelated
2. A state of affairs existing between one of two or more individuals having one common parent.

You will not find this word in the dictionary — it is a new word as of November 9, 2013. It describes the unique, textured, dynamic relationship existing between siblings. Think about the uniqueness of this relationship. Siblings begin their relationship at a very young age. My twins, for example, literally started their lives together. And, if they are fortunate, they will experience their lives to old age together. They experience joys and setbacks together, laugh and cry together, and fight together. And through the fighting, they can learn conflict resolution together. No other relationship is quite like a “siblingship.” Parents are there at the beginning, but all too often they leave too early. Spouse’s join us in our adult lives. Friends often come and go.

When parents die, siblings are called home to “divide up the pie.” And what I experience all too often with the families that I work with, is that the siblings fight over the same things that they fought over when they were kids — property and fairness. However, the parents are no longer there to referee and help divide up the pie fairly.

The estate planning process, if done properly, can do much to minimize the risk of fighting when parents die. However, many plans do not speak clearly enough in this respect. Leaving a family home or a heirloom “equally to the children” does not go far enough to help avoid the family fight. To leave it up to grieving adult children to decide what is “equal” when it comes their inheritance, puts too much pressure on their relationship.

If the parents and the estate planning attorney do not spend enough time minimizing the risk of fighting between the siblings, we risk fracturing, or worse destroying this unique, wonderful relationship — the siblingship.

The estate plan ultimately is supposed to mirror and reflect our lives, and the relationships we built. If your plan does not mirror and reflect your most important values, or does not speak clearly enough to ensure that it helps to preserve the relationships between your children — their siblingship — I encourage you to review your plan with your estate planning attorney.


Estate Planning: Preventing the Fight

Oct 1, 2013

You kids, don’t fight when I’m gone. These were always my Mom’s words as she left to go grocery shopping, and left my brothers and me home alone. I remember, as soon as we’d heard the car leave the garage, we would start fighting over something.

Now as an adult, I notice that the same experience happens among adult children when their parents leave for the last time. While parents are with us, we tend to behave and get along. And once our parents die, many of us begin to argue and fight.

This is sad for me to see time and again … As children not only lose a parent, but also their relationships with their siblings. None of my clients want their children to fight — especially after they’re gone. In fact, this is one of the main reasons why people set up estate plans. And estate planning attorneys can advise parents how to minimize the risk of jealousy, rivalry and infighting between their children. Sometimes we must continue to parent beyond the grave.

HERE ARE FIVE ESTATE PLANNING SUGGESTIONS TO MINIMIZE FIGHTING:

  • Don’t give your children the same asset, give them different things
  • Make it as equal as possible
  • Don’t leave decision-making up to them — you are the parent and these are your assets … you make the call
  • Meet with the family and explain the estate plan
  • Clearly explain your reasoning behind your decisions and share the “why” behind each gift

Honoring End-of-Life Choices

Statistics reveal that about 16% of children in the United States have some sort of disability. The concerns of parents of these children are the same for most any parent and that is to make sure that their children are safe, happy, and live a meaningful life.

Some of these children may not be able to earn a living on their own. Both the federal and state governments understand this and provide benefits for these children, so that they receive food and shelter and medical care. Many of these benefits are “means tested”, meaning that the child cannot have much in terms of assets and cannot make much in terms of income, and if the child inherits assets from the parents, these benefits will discontinue, and the child must use up all of the inheritance before having to reapply for benefits.

This leaves parents to think that they must disinherit their children so that they can continue to receive benefits or entrust another family member to manage money for the benefit of the child.

The better alternative is the Supplemental Needs Trust. Properly written and administered, this trust allows parents to leave the child their inheritance and allows the child to continue to receive the much needed governmental benefits. This Supplemental Needs Trust is written instructing the trustee to pay assets from the trust for the benefit of the child only over and above what the child receives from the government.

This partnership between the federal and state governments and the parents allow the child to live the most meaningful, happy, and independent life possible.


2013 Annual Newsletter

We are already half-way into the Year!  This is our first Newsletter that we have prepared for our clients.  The intent of this Newsletter is to keep our clients up to date with laws that may affect your estate plan as well as provide you with information about our practice.  This newsletter addresses a couple of significant changes in our State and Federal Laws as well as some Frequently Asked Questions (FAQs) to help you with keeping your estate plan current.

The New “Old” Tax Law

We all can breathe a sigh of relief with regard to the estate and gift tax law as President Obama recently signed into law the current Estate and Gift Tax law.  Essentially, we get to keep the Gift and Estate Exclusion of 5 million (indexed for inflation) dollars per spouse.  Also left intact is what is referred to as “portability” which means that a surviving spouse can elect to take a deceased spouse’s unused exclusion.  About the only significant change in this area is that the tax rate for estates above 5 million dollars increased to 40%.

The New State of Hawaii Creditor-Protection Deed

In July of last year, the State of Hawaii gave us a new law that extends creditor-protection for real property held jointly as tenants by the entirety (husband and wife or reciprocal partners) transferred into Trust.

This means the property is protected from a lawsuit against one spouse, even when the property is held in Trust.

The New Joint Legacy Trust - Learn how to Save tax, Simplify your estate plan, and Secure creditor-protection.

The new estate tax law and the creditor-protection deed law favor married couples, and these new favorable laws provide married couples who consider most of their assets as jointly-owned a never-seen-before opportunity to (1) save thousands of dollars in potential capital gains tax; (2) simplify their estate plans; and (3) secure creditor-protection for their Hawaii real estate.  Please call my office to come in for a free consultation to see if this Joint Legacy Trust is right for you.

My Heartfelt Will – Coloring in your plan.

I am very excited about our “second generation My Heartfelt Will” which I copyrighted and provide to each of my clients to add their touch to their estate plan.  My Heartfelt Will offers each client to reach into their past to write their personal stories and experiences that shaped their lives.  It also allows for a place to write instruction and guidance to trustees and family members as to how they hope the inheritance is used to provide benefit and meaning to the lives of their beneficiaries.  The importance of this cannot be understated.  A recent study by Allianz Insurance Company revealed that 86% of baby boomers preferred family stories as opposed to receiving cash as their legacy from their parents.  And 65% of baby boomers said in the study that they felt it was very important that they receive instruction on how their parents’ wishes about their family, death, and estate should be fulfilled.  My Heartfelt Will is intended to add this meaning to one’s estate plan.  If you haven’t been in for a review in a couple of years, please schedule an appointment to review your plan and receive My Heartfelt Will as a gift from me.

Frequently Asked Questions (FAQs)

Q: How often do you suggest that we review our estate plan and what is the anticipated cost of reviewing a plan?

A: Estate planning should be viewed as a process rather than a static, one-time event because our lives are not static.  Change is always occurring, in the law, in your lives, in the community, everything is ever-changing.  Because our lives change, we want to review our estate plans to accommodate change.  It’s kind of like going to the doctor.  Because our bodies change as we get older, we see our doctors to accommodate these changes, whether through medication, surgery, or recommended life-style change, all in order to stay as healthy as possible.  With regard to the cost of reviewing the estate plan, the changes will vary depending on the work involved.  Usually, the review meeting is at no charge.  And you can always decide how much work you would like me to do for you after the consultation.  The process for reviewing a plan includes the following:

  1. Call our office to schedule a review meeting, about every three years after you establish your plan;
  2. Meet with me for about 45 minutes to go over your plan;
  3. After the meeting, our office will send you a letter to reiterate what we talked about in the meeting and to provide a quote for the anticipated work;
  4. You would then confirm that you would like to proceed with the work.

Q: How can we prepare for this review meeting?

A: The review meeting is a very important step in the estate planning process.  Not only can we discuss any changes in your life and any new laws, we can examine your plan with a better understanding of estate planning to ensure that your wishes are clearly spelled out.  The following suggested steps help to prepare for a meaningful review meeting:

  1. Take a look through your plan.  Pay close attention to who you named to make decisions for you and determine if you’d like to make any changes;
  2. Take a look at who your beneficiaries are and the timing and manner of distributions;
  3. Prepare an inventory of your assets;
  4. Check the title of your real estate and the beneficiary designations of annuities, retirement accounts, and life insurance;
  5. Give some thought to your beneficiaries, how are they managing money?  How are their relationships with each other or their spouses?  How are their careers?  Are there any concerns for any of them?
  6. How are you doing?  Are you planning to make any significant changes in your life such as moving?  How are you managing your affairs?  Do you feel you need more help in this area?

The Benefit of a Family Meeting

One key element of ensuring a successful estate plan and transition of assets is to engage in a family meeting with the lawyer, when appropriate, once the estate plan has been executed.  These meetings may not be appropriate when children are minors or family friction exists.  The benefit of the meeting is for parents to clearly state in their own words, their intention and meaning behind the estate plan, and for the children to meet the estate planning attorney and other advisors.  While there is a cost associated with this meeting (about $500.00), I believe it is a critical step in the estate planning process. 

Special Needs Planning

Statistics reveal that about 16% of children in the United States have some sort of disability. The concerns of parents of these children are the same for most any parent and that is to make sure that their children are safe, happy, and live a meaningful life.

Some of these children may not be able to earn a living on their own. Both the federal and state governments understand this and provide benefits for these children, so that they receive food and shelter and medical care. Many of these benefits are “means tested”, meaning that the child cannot have much in terms of assets and cannot make much in terms of income, and if the child inherits assets from the parents, these benefits will discontinue, and the child must use up all of the inheritance before having to reapply for benefits.

This leaves parents to think that they must disinherit their children so that they can continue to receive benefits or entrust another family member to manage money for the benefit of the child.

The better alternative is the Supplemental Needs Trust. Properly written and administered, this trust allows parents to leave the child their inheritance and allows the child to continue to receive the much needed governmental benefits. This Supplemental Needs Trust is written instructing the trustee to pay assets from the trust for the benefit of the child only over and above what the child receives from the government.

This partnership between the federal and state governments and the parents allow the child to live the most meaningful, happy, and independent life possible.


Time for a Meeting

Many people think that when they retire they would be able to travel, or sit and read a book worry-free. Sadly, many also express that their experience during retirement is not at all that way. Some are caring for spouse’s who have dementia or other mental or physical challenges. Some are fearful that they do not have enough money to last their lifetime. Others face their own mental and/or physical challenges as well.

These challenges can turn into crisis rapidly in all areas of life, including mental, physical, legal, economic, social and spiritual.

Successfully managing these myriad of issues requires family members and their advisors to unify their efforts together in a holistic approach synergistically to ensure that our elders remain safe, healthy and as independent as possible, preserving their dignity for the duration of their life.

For this purpose, engage in a family meeting with all family members, fiduciaries and the financial advisor so that everyone gains an understanding of the estate plan and the underlying intent and wish of the maker of the plan. Not only can this provide for a meaningful discussion, a “circle of trust” can be established to provide protection from anyone outside of this circle attempting to take advantage of our elders.


First Estate Planning Post

Aloha,

Welcome to my blog - Here I will periodically post important information for my clients and prospective clients to learn about ethical estate planning and other products and services available from my law firm.

I would like to share with my clients a list of Articles Published by Generations Magazine, Hawaii's Resource for Life.  Generations Magazine is made possible by Percy Ihara and the staff of Generations808.com located at 1414 Dillingham Blvd., Suite 201, Honolulu HI 96817

Articles Published and Authored by Stephen B. Yim

Come back next month, for more information on what 2013 has in store for your potential estate plan.

Mahalo, 

Stephen

Legal: Fighting Over Assets?

“My parents made a trust with a lawyer. Why is it not working and the trustee and beneficiaries are fighting over the assets?”

Sadly, these are words I often hear from families who call me after the second parent dies to settle their parents’ estate. The Trust might have worked from the drafting attorney’s point of view in that the assets did not go through probate and the taxes were minimal. However, the drafting lawyer probably did not investigate and counsel their clients as to the relational aspects of estate planning.

In my 25 years’ experience as a lawyer, I’ve come to realize that there are five questions that must be answered with a “Yes” to ensure that the estate plan will work:

  • Did the plan properly transfer the assets to the beneficiaries avoiding probate and minimizing tax?
  • Did the beneficiaries receive the assets properly to minimize the risk of mismanagement and misspending of assets?
  • Did the parents clearly convey their message, meaning, and intent to their trustee and beneficiaries?
  • Did the beneficiaries and trustee clearly receive the message, meaning, and intent from the parents?
  • Will the trustee and beneficiaries honor the message, meaning, and intent of the parents?

In other words, making the estate plan is not enough. Communication, verbally and in writing, with the trustee and beneficiaries over time conveying the message, meaning and intent, and making sure they clearly receive your message, meaning and intent is critical to a successful estate plan.