Andrew Ewalt's Law Blog

Living Wills

So what is a living will exactly? It is a legal document that directs your physician to discontinue life-sustaining procedures (cardiopulmonary, artificial respiration and artificial hydration and/or nutrition) if you are in a terminal condition or a permanently unconscious state.

Living wills are very important b/c family members or loved ones are most often put in the position of having to decide whether to terminate or continue life support when there is no hope for recovery.  Having a living will means you have made the decision for them.

Unfortunately, in Connecticut our current living will statute more heavily favors providing liability protection to health care provider (doctors or hospitals) rather than protection to the patient right to refuse medical treatment.  Given the recent Terry Schiavo case it is time for our legislature to reconsider the statute in favor of stronger patient's rights. 

However, though not as strong as the law could be it is never the less the best way of conveying your wishes on this most personal choice.  It is always important to take control of your life and equally important to take control of your dying.  Having a written living will provides just that....control. 

Protection For Key Employees

The business world can be very competitive. One of the worst things that can happen to a business is to lose a key employee.  That is why it is important to consider options for protecting your key employees.

What if a business owner or key employee where to die?  What process would be used to:

1.  Find, hire and train to take that employees place.

2. Pay bills to maintain the company's good credit rating.

3. Paying off business loans,  which lenders may call after the death of an owner/key employee.

4.  Make up for the loss of revenue caused by the subsequent disruption in the business.

One option is to purchase "Key Employee" life insurance. 

Title Insurance Pros and Cons

During a recent real estate closing I was asked whether “title” insurance was necessary (for those of you who are unfamiliar, title insurance is a form of insurance that guarantees that no other individuals can claim an interest in your property.) 

The answer to this question is that it depends on whether a buyer is taking a mortgage or not. 

Whenever a bank or lending institution is involved in providing funds (mortgage) for an individual to purchase real estate the bank or lender will require the buyer of the home purchase a title insurance policy on behalf of the bank or lender.  The reason for this is that the bank or lender wants to be certain that their interest in the property is protected. Thus the value of the bank or lenders title policy is often equivalent to the amount of money that the buyer has borrowed.  However, though the lender requires the borrower purchase a title policy on the lenders behalf they do not require that the borrower purchase a separate “owner’s” policy for themselves. 

An owner’s policy is a separate policy from that of the bank or lenders policy and is designed to protect the buyer’s interest in the real estate.  The value of the owner’s policy is equivalent to the purchase price (property value) of the real estate.

As noted previously owner’s policies are not mandatory and as such it is important to determine that one is being provided.  However, the one time cost associated with an owner’s policy is generally not much more then that of the bank or lenders policy. As such the title insurance company often bundle these policies together providing your bank or lender with their insurance while providing you with a policy without much additional cost.  Ultimately, it is the decision of the buyer in counsel with their attorney to determine whether there is a need for an owner's policy. However, for the peace of mind the one time cost of this insurance can provide, it is highly recommended.

Trust Services and Fees

As an attorney who advises clients regarding their estates I am often asked about trusts.  In my opinion trusts are an invaluable tool that provide countless solutions to most individuals estate planning goals and objectives.  As such there are many different types of trusts. Essentially, there is a trust option for every estate planning circumstance and way to many to discuss in this short message.  However, one very important consideration a trust creator (Grantor or Settlor) must ask themselves when drafting a trust is who the trustee will be.  One of many options is a professional trustee or trust company.  There are many advantages of using a professional trustee.  Here are a list of some of the advantages. 

1.  Professional management by trained experts. Trustees who do not deal with trust on a regular basis can be overwhelmed by the duties required of them. 

2.  Impartiality in making investment decisions and dealing with a beneficiaries.  Naming an independent trust company removes the emotional elements often associated with friends or family members and assures your wishes are fulfilled exactly as they are spelled out in the trust.

One question  that is often raised when clients are considering a trust is the cost of trustee services.  Generally, fees for trust services are spelled out in the trust document.  Under most circumstances, the fees are calculated annually, based on the level of responsibility assumed by the trustee and the value of the assets in the trust. 

Trusts and trust services can be confusing, but not learning about them could be devastating to your family's future.  If you would like more information about trusts and trust services please contact me for an appointment. 

Wise Woman And The Law

Woman have many roles in in life, daughter, aunt, wife, friend, mother, grandmother and even great-grandmother.  Traditionally, women are the nurturers and caregivers in our society, let alone our families.  However, a woman in the workforce can expect to earn less than her male counterparts, woman are less likely than men to have their own retirement nest egg and only 21% of widows receive survivor income from their husbands pensions. Not to mention the many legal and financial problems that come with divorce.

Long-term financial and legal security of woman can be a real challenge.  Without proper planning some fundamental legal challenges can make matters  even worse.  For example, who will take care of a woman, the important people in her life and her assets, if she is incapacitated? Who will be her legacy at death? Will she leave an estate that is orderly or a mess?

Through proper planning, a woman can appoint the agents and fiduciaries to make her personal, health care and financial decisions if she becomes incapacitated. In addition, she can appoint guardians to rear her minor children to adulthood and trustees to manage their inheritance.  Along the way she can protect the inheritance from her ex-spouse or even from her husband's next spouse.

In short, an ounce of planning in advance is worth a pound of cure without it.

Happy New Year!

Have a wonderful and safe new year.   I will be back in 2010 with more tips and advice.  See you then.

Hiring New Employees

Things to consider when hiring new employees:

Eligibility for employment. You must verify that each new employee is legally eligible to work in the United States. This will include completing the U.S. Citizenship and Immegration Services (USCIS) Form I-9, Employment Eligibility Verification.  You can get the form from USCIS offices or by calling 1-800-870-3676 or visit the USCIS Web Site at www.uscis.gov.

New hire reporting.  You are required to report any new employee to a designated state new hire registry. Many states accept a copy of Form W-4 with employer informaton added.

Income tax witholding. Ask each new employee to complete the 2007 Form W-4

Name and social security number.  Record each new employee's name and number from his or her social security card.  Any employee without a social security card should apply for one.

Protecting the Family Business or Farmers

Estate taxes can become a very real problem when an estate includes a farm or real estate used in a family business. Since federal estate tax have been repealed for only one year (2010), and Connecticut has recently implemented it own separate estate tax it is smart to plan now. 

For federal estate-tax purposes, land and buildings have to be valued at their “highest and best use.”  Thus, a farm that could be sold to a developer for more than it is worth, as a farm generally must be assessed at the higher fair market value. Unless the farmers family has another source of cash to pay the tax this may mean the farm will have to be sold in order to create the dollars necessary to pay Uncle Sam.

Proper planning now can help the farmer get around this problem.  If you are in this situation please call me now so we can advise you of any steps you should be taking to protect your family business or farm.

Business Sucession Planning

Statistically, only thirty percent of family owned businesses survive from the founding generation to the next generation. Beyond that generation the success is even worse.

The primary reason for the lack of success rests on the fact that most business owners fail to make plans, have the wrong plan or have not updated the plan. 

A comprehensive estate plan should include planning for the succession of the business. Here are some things to consider.

1.  If some children are active in the business and others are not, how do you treat everyone equally?

2.  If they business is to be sold to a third party how can the sale be structured to protect your family and loved ones?

3.  Will there be sufficient liquid cash in the estate to pay any death taxes or will the business have to be liquidated in order to raise the cash needed?

If you are concerned about the succession of your business it is very important to plan accordingly. 

Insurance Checkup

Whether you are married or single, young or old, whether you rent your home or own it, an insurance checkup is an important part of your overall Life and Estate Planning success.

The most important assets are your family's well-being, your health and your ability to earn an income.  Life and disability insurance are critical to your success and need to be reviewed periodically to make certain you have the proper protection in place.

Here are some things to consider:

Insurance experts say the likelihood of becoming disabled, at least temporarily, is greater than the likelihood of death during your working years.  Disability insurance helps replace your income in the event you become disabled and cannot work.

Most people avoid thinking of their untimely death, however, life insurance protection is a must for protecting the financial needs of the family in the even of the death of a spouse or a parent.  Consider the need to pay the rent or mortgage, provide child care and fund child's education.

Be certain you are fully protected. Contact your insurance professional for your checkup.