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Top 10 Ways to Protect Children Under 18 and Over 18, Stateside and Abroad

Even for children who have newly become legal adults, parents need to be empowered to make decisions to help protect them in times of need. Laying out important considerations for families to discuss before and after children turn 18, McManus & Associates – top-rated, Tri-State-Area-based trusts and estates law firm – today released the newest edition of its educational focus series. The discussion, “Top 10 Ways to Protect Children Under 18 and Over 18, Stateside and Abroad,” identifies questions parents should evaluate, from who should be named as local representatives on a health care proxy for minors to whether a prenuptial agreement is appropriate if an adult child is soon getting married.

LISTEN HERE: “Top 10 Ways to Protect Children Under 18 and Over 18, Stateside and Abroad”

“While young adults today are far more astute and sophisticated on world matters than 100 years ago, they’re also far less independent than when kids were married at 16 and took over the family farm at 18,” explained John O. McManus, top AV-rated attorney and founding principal of McManus & Associates. “The fact is that the frontal lobe is not fully developed until the mid-20’s, and people who have newly entered adulthood still need to tap their parents’ experience-earned insight when evaluating important decisions.”

 

  1. What are the legal and medical risks for children upon reaching age 18, legal adulthood?
    1.  Once your children are legal adults, you are no longer able to automatically make medical decisions on their behalf, access their medical records, or take any other action for their benefit if they are unable to do so.
    2. Additionally, parents will not have automatic access to their child’s financial accounts if they are over the age of 18.
    3. Risk of inadequate, inappropriate or insufficient medical care is a primary concern for many parents with children leaving for school for the first time.
    4. Before your “adult children” leave for school, they must consider completing a Health Care Proxy, Durable Power of Attorney, and an Authorization for Release of Protected Health Information to provide parents with the authority to act with respect to their medical, legal, and financial needs if they are incapacitated or otherwise unable to handle their own affairs.

 

  1. What are the necessities when my child is studying overseas?
    1. All of the reasons above take on an extra urgency if your child is away from home in college or out of the country on a semester abroad.
    2. Learn about the healthcare system of the county where your child will be living. There are often differences between private and public hospitals, restrictions on international insurance accepted and, potentially, qualification standards for medical professionals.
    3. Colleges will not release a student’s medical records, even to parents, if the student is over the age of 18. This may be extremely detrimental to a child’s well-being in a physical or emotional medical emergency. Advance planning can facilitate communication between the foreign hospitals and parents.

 

  1. Upon reaching age 18, does my child need a will?
    1. We believe that broadly the answer is no. Most young adults do not possess assets sufficient to merit the use of a Last Will and Testament.
    2. However, if large gifts have been made to an adult child, if the adult child owns shares in a family business, or if he or she received money from a settlement, a Last Will and Testament may be a critical component in the family’s overall estate plan to avoid unintentional beneficiaries and estate tax implications.
    3. The Will should provide direction for a power of appointment to allow your child to appoint trust assets to descendants and/or a spouse.

 

  1. Should I appoint my adult child as my representative in my incapacity planning?
    1. Adult children may be the best choice to name as fiduciaries to make the parents’ medical and/or financial decisions.
    2. If they are away for school, however, consider appointing a local person as a representative in the event that the child is not able to serve.
    3. The adult child may be appointed in the documents to serve as a trustee at a future date (when a certain age is reached, such as 25).
    4. Often including adult children can be a trigger to start important conversations about wealth, inheritance and family mission.

 

  1. Should I make outright gifts to my adult children?  What are the risks of these gifts and custodial accounts?
    1. Outright gifts to adult children should not exceed a certain amount as outright gifts are exposed to attack and may deter your child from making his or her own way in the world.
    2. Presently, $14,000 from each parent can be transferred on an annual basis to each child and grandchildren. Additionally, up to $5.34MM can be transferred gift tax, estate tax, and GST tax free to children and grandchildren.
    3. A better way to make larger gifts to children is in lifetime trusts that will protect the assets against any unintended diversions or reversals (i.e. divorce, law suits, creditors, etc.) that a child may encounter, while still providing for the child’s needs and allow the child to maintain a certain quality of life.
    4. We often recommend that a child serve as co-trustee at age 30 and sole trustee at age 40.

 

  1. My child is getting married.  Should I review with them whether a prenuptial agreement is appropriate?
    1. We support having conversations about wealth with children far before this decision needs to be made. With a set “on-boarding” process for children’s significant others, you set the stage for a successful conversation around finances.
    2. Certain assets, which are intended to stay within the family, can be protected by trusts and pre-nuptial agreements.
    3. Life estates in real property can also be set up to provide for the in-law spouse while keeping the asset moving down the family line.
    4. Significant work has been put into creating trusts for your children so that there is little risk of diversion, but a child can empty the trusts. Children should be well-versed in the overall strategy to invest the assets in trust instead.

 

  1. What are the medical risks if you are unavailable for your minor children?
    1. In the event that parents or guardians are unavailable and minor children require medical care, a hospital or doctor’s office will reject the treatment that the child needs, unless there is a clear risk of death.
    2. In the past, care providers have been sued for wrongly treating children without the consent of the parents and now mandate formal written permission from a child’s parents if they are not present or cannot be contacted.
    3. A local representative should be appointed to assist in getting your child admitted to the hospital.
    4. In order to assure that minor children are treated properly and immediately, their Health Care Proxy and Authorization for Release of Protected Health Information will name representatives who will be able to (i) receive their critical medical information; and (ii) make medical decisions for them if the parents are unable to do so.
    5. A set of the documents should be kept at the house, in a place that is easily accessible such as inside the kitchen cabinet door.
    6. Electronic copies also suffice.

 

  1. What if both parents of a minor become incapacitated? 
    1. The Wills we prepare provide comprehensive directions for the guardians that outline expectations and wishes for the minor child’s upbringing, including visitation groups, outlines for holidays or important life events, etc.
    2. These instructions may include an advisory group to assist the guardians in making decisions and understanding the parents’ objectives and guidance regarding priorities for education, medical treatment, household support, and other important considerations.
    3. A family mission statement will assist with direction for your children and may be critical if a child has special needs.
      1. A supplemental needs trust provides for individuals with special needs while allowing them to continue to receive support from the government.

 

  1. What issues do we see for minor children in foreign jurisdictions? Or children with foreign citizenship?
    1. Keep children’s passports current – even expedited passports can take weeks to process. In the event of emergency travel, it is critical that all children’s passports are up-to-date.
    2. Without a legal guardian, a child will not be given a passport. A third party must be authorized by the court in the absence of a legal guardian to apply for the passport.
      1. This may be remedied by a signed and notarized document prepared by parents appointing this individual.
    3. If children of foreign nationality living in the US must move abroad to live with the guardian named in the Will, having a passport from the same country as the guardian can speed up the departure process since there will be no need to wait for a visa approval.
    4. Finally, most airlines have policies regarding accompaniment of a minor for air travel; check with your preferred carrier.

 

  1. Your child is under 18 and your selected guardians reside overseas. What are the risks to getting them “home”?
    1.  A Last Will and Testament should name temporary guardians in the United States. The temporary guardians assist in the process of transferring the children overseas to be united with the appointed guardians. A temporary guardian can also be critical if the child is an infant or requires other forms of immediate care.
    2. In order for the child to live abroad long-term, he or she will need to apply for a visa to the country of destination. Visa applications can require health screenings, background checks, and other time-consuming tasks that delay the child’s departure from the U.S. If the guardian named in the will cannot make it to the U.S. to take custody, a temporary local guardian can help navigate this process.
    3. Trap for the unwary: Children in the U.S. with a green card are only permitted to leave the country for a period of one year before needing to reapply for re-entry to America. After a two-year period, the green card will expire.
    4. New York will not appoint a non-US citizen guardian and will require a local co-guardian who can assist in moving the child abroad. A foreign guardian can serve alone in NJ, CT, or FL, for example; however, the courts will look at the best interest of a child and may request that a local co-guardian be named. New Jersey will send paperwork for guardianship to the Embassy or Consulate office in the country where the named guardian resides. The testamentary guardian will have to sign the papers at the Embassy, and sole guardianship may be granted.

“Talk to your children about why it’s important for them to sign documents that enable you to act on their behalf, if necessary,” McManus said. “Expect the best, of course – but you’ll be glad you planned for the worst if you’re ever confronted with it.”

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DailyFinance Shares How McManus Helped Clients Avoid Estate Planning Nightmares

Daily FinanceEstate planning nightmares don’t just exist in dreams. Writing for DailyFinance, Reporter Michele Lerner relays several real-life horror stories that arose—and certainly have been replicated in similar forms far and wide—due to families neglecting to have detailed conversations about inheritance plans. “According to the 2014 Intra-Family Generational Finance Study by Fidelity Investments,” Lerner writes, “64 percent of parents older than 55 who have at least $100,000 in investable assets and their adult children over 30 aren’t on the same page about when the right time is to have conversations about estate planning.”

For her article, “Avoid These Estate Planning Nightmares,” Lerner asked John O. McManus, founder of McManus & Associates, to share estate planning blow-ups that his clients have faced and how he helped them overcome each challenge. From the story’s section titled, “Cross-Country Squabbling Siblings”:

A client of John O. McManus, an estate attorney and founding principal of McManus & Associates in New York City, had a client whose daughter lived on the West Coast and son and daughter-in-law lived close to her on the East Coast. The children had joint power of attorney, and the daughter would sign blank checks so that her brother and his wife could pay for things their mother needed without constantly needing her signature.

“The son wrote his wife checks from his mom’s account as a salary to pay her for taking care of his mother, which caused some tension between the siblings,” says McManus. “Due to the son’s history of run-ins with the law, the daughter was wary of letting him have too much power over his mom’s estate.”

Ultimately, the mother named the daughter as sole executor. But after the mother passed away, the daughter-in-law took things out of the house that she claimed were hers or were “intended for her” by the deceased mom. “The daughter called the cops to have the daughter-in-law arrested when she would not leave the home of the decedent,” says McManus.

McManus was able to get both parties to agree that the daughter-in-law could go through the house with the estate sales team to select items that she claimed were left to her, and the company would value these items to be deducted from her share of the deceased’s estate.

To avoid situations in which relatives fight over individual property, it’s best to include a written list of items of value with designated recipients in your will.

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New Jersey Law Journal Features Article by McManus in Special Supplement on “Wealth Management”

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On July 28th, New Jersey Law Journal published a special supplement on “Wealth Management.” The featured section includes a co-authored guest article from McManus & Associates Founding Principal John O. McManus and Mark Cortazzo, senior partner at MACRO Consulting Group. The piece, titled “How Estate Planning Can Unintentionally Wreck a Retirement Plan,” outlines steps that can be taken to protect clients when complex investment vehicles like variable annuities are involved in the estate planning process.

Introducing the topic, McManus and Cortazzo emphasize the importance of being fully informed as a professional who can be held accountable for any missteps and blamed for poor recommendations: Continue reading

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John McManus and Dominic Pepper Co-Author Article for Bloomberg BNA

Reproduced with permission from Tax Management Weekly State Tax Report, 2014 Weekly State Tax Report
3, 7/4/14. Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

July 14 Article 1July 14 Article 2July 14 Article 3July 14 Article 4July 14 Article 5

 

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John O. McManus Pictured and Quoted in the New York Times

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New York Times “Wealth Matters” columnist Paul Sullivan recently interviewed John O. McManus, founding principal of NJ-based McManus & Associates and a top AV-rated attorney, about the implications of a recent court case in which he successfully helped a client named Kate contest the will of her late grandmother. John grasped the dynamics at play in Kate’s situation with her family, which was crucial to a successful outcome with the case.

With the column, “When a Will Divides an Estate, and Also Divides a Family,” John’s photo below appeared with the caption: “John O. McManus of McManus Legal [McManus & Associates] says that many cases contesting wills are not clear-cut. “Should the grandkids get their dad’s share? Absolutely,” he said. “Were the grandkids without fault? No, they didn’t visit Grandma enough.”

McManus - New York Times

From the piece:

What Kate’s case shows is both how easy and complicated it is to execute a deathbed disinheritance. John O. McManus, a lawyer in New York who represented Kate and her siblings, said that like many cases contesting wills, this one was not clear-cut. “Should the grandkids get their dad’s share? Absolutely,” he said. “Were the grandkids without fault? No, they didn’t visit Grandma enough.” Continue reading

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New York Family Publishes Article by McManus on Estate Planning for High-Income Household

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Estate Planning For High-Income Households

A local expert weighs in on the top 10 considerations

By John McManus, June 2014

John McManus high-resAmerican poet and novelist Don Williams, Jr. once said: “Despair is most often the offspring of ill-preparedness.” In the same vein, preparation to handle the problems that commonly challenge high-income families sets apart those who preserve wealth and values for posterity from the 70 percent whose inheritances and family businesses do not survive the second generation.

One of the most important (but sometimes overlooked) aspects of creating an estate plan involves detailing wishes and expectations for the care of children in an emergency or tragedy. Families should also give careful consideration to the sophisticated wealth transfer opportunities now available to create a stream of affluence to the next generation in a tax-efficient manner; but in doing so, parents and grandparents must be aware of the risks and complications that may arise from giving assets to children. Continue reading

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McManus Shares Mission-Critical Advice on the Do’s and Don’ts of Creating a Trust in CNBC Article

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On assignment for CNBC, Jennifer Woods recently penned an article to help readers think through the terms when creating trusts in order to ensure money “lands in the right hands and isn’t squandered.” For expert guidance on the topic, Woods turned to John O. McManus, founding principal of McManus & Associates and a top AV-rated estate planning lawyer.

Mission-critical advice from McManus on the importance of perpetuating a trust was spread far and wide via Woods’ article, “Heir tight: The dos and don’ts of creating rock-solid trusts.” From the story:

“We like the idea of a trust remaining in effect for the child’s lifetime,” said John McManus, founding principal of McManus & Associates, a trusts and estates law firm. This is particularly beneficial when large sums are involved.

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Founder of McManus & Associates Honored by YMCA with Spirit Award for Outstanding Volunteer Service

The Somerset Hills YMCA of New Jersey recently held its 3rd Annual Volunteer Spirit Awards & Annual Campaign Victory Celebration. Members of the community joined together to recognize the far-reaching benefits of volunteerism and the selfless spirit in which it is offered. As such, Spirit Awards were presented to thank Y volunteers who “have made an impact” and inspire “by giving of themselves selflessly to benefit the Y and its members.”

John O. McManus, founder of McManus & Associates, was honored to receive a Spirit Award in the Living Our Cause category on this “Night of Stars,” the theme of the evening. John donated his talents in the volunteer area of Board of Directors/Annual Campaign/Planned Giving to benefit the Somerset Hills YMCA, a big-hearted organization that touches lives throughout the community.

“I am grateful to the YMCA for providing a role in which I can utilize my strengths to serve my neighbors alongside other amazing volunteers,” shared John. “To be called the ‘heart of the Y’ as a volunteer is a tremendous compliment.” Continue reading

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Top 9 Considerations in Light of Administration’s Proposals to Change Estate and Gift Tax to Generate Revenue

Top 9 Considerations in Light of Administration’s Proposals to Change Estate and Gift Tax to Generate Revenue

 Award-winning law firm McManus & Associates flags potential modifications to the law that should factor into one’s estate planning

 NEW YORK, NY – President Obama and the Treasury Department recently released the Fiscal Year 2015 Budget Proposal and the associated “Green Book,” which details the Administration’s revenue proposals. With future policies that will be pushed now clear, McManus & Associates, a top-rated tax and estate planning law firm based in the Tri-State Area, today released the “Top 9 Considerations in Light of President Obama’s Proposed 2015 Budget.”

“Although not all the items in the Green Book will make it into the final budget, these explanations of revenue proposals reveal policy priorities,” commented McManus. “It shouldn’t be overlooked that the Administration’s recently released proposals for Estate and Gift Tax contain several items that could significantly affect one’s ability to pass assets to loved ones in a tax-efficient manner.” Continue reading

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WSJ’s MarketWatch Features Advice from McManus on “How women can make estate planning easier”

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Andrea Coombes

Andrea Coombes

Andrea Coombes writes the “Ways and Means” column for MarketWatch, a media property of the Wall Street Journal that has nearly 9.5 million unique visitors per month. McManus & Associates Founding Principal and top AV-rated Attorney John McManus recently spoke with Coombes about special considerations for women when it comes to estate planning.

Coombes’ story, “How women can make estate planning easier,” was today published by the news outlet and includes a large section that reflects thoughts shared by McManus on the topic. From MarketWatch:

Women who remarry or those who come to a marriage with significant assets should think carefully about their estate plan before tying the knot.

“We find that women are hesitant to discuss their net worth going into a new relationship, but that puts them in grave danger,” said John O. McManus, founder of McManus & Associates in New York and New Providence, N.J.

“If they keep the assets on their own balance sheet, the good news is, if they divorce, the new spouse won’t have access to that money,” McManus said. While state laws vary, in some cases the assets one brings to a marriage “are not an asset in divorce.”

The bad news, assuming your wishes are otherwise, is that, if you die first, your husband will get one-third of those assets. “By operation of law, your spouse is entitled to a minimum of one third of your assets. Social policy in the U.S. says you cannot disinherit your spouse,” McManus said.

Even if you write a will in which nothing is left to the surviving spouse, “by law, he’s entitled to one third of the assets,” McManus said.

There are a couple of ways to forestall that issue, though none are ideal, he said.

One tactic is to make sure beneficiary designations on retirement plans and the like are set such that your children or other heirs inherit — but those designations need to be in place before you get married. If they are, such designations “will control and overrule the right of election,” McManus said.

But changing beneficiary designations after you get married may be difficult, because some financial-services firms won’t allow changes that entail disinheriting a spouse without the spouse’s consent.

Another solution is to set up a trust, naming a child or other relative as the recipient, and put assets into it before you get married. You can still borrow from the trust, McManus said, but the husband will not have access to that money if you die.

McManus said he’s seen situations where a spouse changed the beneficiary designation on a retirement account to name her husband, rather than a child, with a verbal agreement that the money would go to the child in the event of the husband’s death. But at that point, there’s no way to be sure that will happen when you’re gone.

“Be clear in your head what you want to leave to your children and to your spouse before you get married,” McManus said.

Coombes’ piece goes on to cover the estate planning basics that women should consider putting in place, no matter their ages or how much money they have. The list from the article:

  • A financial power of attorney, naming the person who will make money decisions for you if you can’t

  • A health-care power of attorney, naming the person who will make health-care decisions for you if you can’t

  • A living will specifying your end-of-life wishes

  • If you have minor children, a will that names a guardian for them

  • Make sure the beneficiary designations on retirement accounts and life-insurance policies are up-to-date.

  • Talk to your bank and representatives of your other financial accounts to make sure the titling of those assets suits your situation.

Coombes’ story includes more valuable information, so don’t miss reading it in full. Make your way over to MarketWatch to check it out.

And to take action on the to-do’s recommended by experts in the article, including our firm’s own founder, give us a call at 908-898-0100.

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