Category: Wisdoms

Estate Planning: Start With ‘Why’

Trust beneficiaries are sometimes left to wonder why a decedent instructed that a trust distribution be made in a particular way.

The trust clearly identified who the beneficiaries were, what they were to receive and how they were to receive. But unfortunately, the trust was silent as to the “why” of the distribution — the underlying reason and purpose for creating the trust in the first place.

Not clearly setting forth intention or purpose in one’s estate plan can lead to misunderstanding, confusion, hurt feelings, potential law suits and disruption of family relationships.

In his book Start With Why, Simon Sinek explains it this way: The “what, when and how to do” come from our neocortex, the part of the brain that contains the language center. The intentional and emotional purpose-driven “why” comes from the limbic area of the brain, which deals with emotions and memory. That area of the brain has no capacity for language, which is why writing out the purpose, emotion and intention is difficult. Most of what we do is driven by clear intention and purpose, so it is important to put effort into writing out our intentions and purpose.

Keep in mind that your estate plan is intended to be your last say, so the “why” must be expressed as the foundation for the plan.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | www.stephenyimestateplanning.com

Trust beneficiaries are sometimes left to wonder why a decedent instructed that a trust distribution be made in a particular way. The trust clearly identified who the beneficiaries were, what they were to receive and how they were to receive. But unfortunately, the trust was silent as to the “why” of the distribution — the…
Elder Abuse Reporting Deadlines

Recently, I received a call from a woman who wanted to report that her father had been the victim of theft. The culprit was her niece, who had taken over $100,000 over a three-year period. The caller had the evidence and her father now wanted to hold the niece accountable for what she had done. However, the only problem was that the crime was outside the statute of limitations.

The statute of limitations, or SOL, is a time period wherein the criminal conduct must be filed with the court. It is a time limit the victim has before the case is deemed too old. It is important to note that it doesn’t matter when the case was reported to the police — the case has to be accepted by the court within the SOL.

The length of time for the statute of limitations depends on the severity of the crime. For a misdemeanor crime (one in which the value of property or money taken is under $750 or injuries are less than broken bones), the SOL is two years. For a felony crime (over $750 taken or serious injuries sustained or a weapon used), the SOL is three years. There is no SOL for murder.

Sometimes the SOL can be extended if certain facts are present. For instance, if someone only recently discovered a theft that was made by deception, the SOL begins not when the crime was committed, but when it was discovered.

Let’s say “bad son” took $20,000 from his dad by forging checks and cashing them on Feb. 1, 2017. Dad discovers the crime on Jan. 1, 2018 (SOL begins). Father doesn’t report the crime to the police until Dec. 31, 2020. Does he make the SOL deadline? Probably not, because although the SOL ends Jan. 1, 2021, the police have only two days to investigate the crime, present it to the prosecutors and file the matter with the court. “It just ain’t gonna happen.”

There is no good reason to delay reporting elder abuse. Over time, memories fade, evidence gets lost and there can be unforeseen delays in the investigation. All this can result in missing the SOL deadline and not holding someone accountable for their bad conduct.

If you suspect elder abuse, call these numbers:
– Police: 911
– Adult Protective Services: 808-832-5115
– Elder Abuse Unit: 808-768-7536
If you have questions about elder abuse, call or email:
808-768-7536 | ElderAbuse@honolulu.gov

Recently, I received a call from a woman who wanted to report that her father had been the victim of theft. The culprit was her niece, who had taken over $100,000 over a three-year period. The caller had the evidence and her father now wanted to hold the niece accountable for what she had done.…
Passing on the Family Business

Only about 25 percent of family businesses survive 15 years or more. Only about 25 percent of those will survive the transition to the founders’ descendants. Many factors contribute to these statistics. Here are two critical factors.

1. Willing and able? Most parents want to treat their children equally when it comes to passing on the family wealth, but not all children are capable of running a business and not all children want to continue in the family business once the founding generation is gone.

2. Is the business viable? Take a sober look at your business and your descendants, and consider: Can my business be successful for another generation? Your business may have provided a brilliant solution to a need back when you founded it, but markets, technology and spending patterns have changed since then. Unless your business is nimble enough to make appropriate adjustments, it may not continue to be viable.

The continuation of your business and passing on wealth to your descendants may go hand in hand, but if none of your children are willing or able to carry on your dream, selling your business and passing on the proceeds may be the best bet.

Your trusted advisors can help you find a solution that works best for all concerned.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
www.est8planning.com
808-587-8227 | maku@est8planning.com

Only about 25 percent of family businesses survive 15 years or more. Only about 25 percent of those will survive the transition to the founders’ descendants. Many factors contribute to these statistics. Here are two critical factors.
Rules for Adult Kids Returning Home

As the COVID-19 pandemic spread across the country, parents saw a wave of adult children move back home. Pew Research recently found that 52 percent of 18- to 29-year-olds now live in a parent’s house.

Some children may have moved back simply due to safety during the virus response or because universities switched to e-learning. Others may have returned because of financial reasons.

As parents, it’s important to help your children find their footing, but you also don’t want to put your own financial security at risk. You can achieve this by setting boundaries and providing clear expectations for how you expect your child to contribute while they live under your roof.

Discuss Whether They Will Pay Rent

Will you expect them to pay rent while they are living with you? It’s important to have this discussion before they move in. Your child might assume he or she can live in your house rent-free for as long as they want. You want to ensure that everyone has the same expectations for the arrangement — before they move in.

Before they move in, have a conversation regarding what they can afford to pay and what you require from a financial standpoint, so each of you remains on the same page.

Find Other Ways They Can Contribute

It’s possible that your child needs to move back because they’ve lost his or her job. If they’re under financial hardship, then it’s understandable if you don’t want to charge them rent. But that doesn’t necessarily mean you have to let them sit on the couch all day watching TV, using your kitchen as their own free grocery store.

Instead, set ground rules for their stay. Are they looking for a job? Do you want free rent to be contingent on them following through with job searches? Do you want them to pitch in for food costs? Will you allow them to borrow cash?

If your adult child is not paying rent, give him or her tasks that will help save you money. Ask them to mow the lawn or paint the house in between their job searches. It will give them something to do beyond worrying about their next interview.

Set a Timeframe

While you may love having your child back at home — and they may enjoy it as well — set expectations regarding the length of his or her stay. Talk with your child about when they hope to move out. If it’s until they can afford a place to live by themselves, then also ask them what they need in order to feel comfortable enough to live on their own. Do they need a few months’ worth of paychecks first? Will they move as soon as they have a job? Are they saving for a down payment on a house?

By agreeing to a plan, you’re protecting yourself in case they are thinking about an extended stay. Plus, it will help you enjoy this time you have with your child at home.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1222, ext. 1240 | michael.w.yee@ampf.com
Michael W. K. Yee, CFP,® CFS,® CLTC, CRPC,® is a Private Wealth Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 36 years. Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services LLC., a registered investment advisor.
Ameriprise Financial Services LLC. Member FINRA and SIPC.
© 2020 Ameriprise Financial Inc. All rights reserved.

As the COVID-19 pandemic spread across the country, parents saw a wave of adult children move back home. Pew Research recently found that 52 percent of 18- to 29-year-olds now live in a parent’s house. Some children may have moved back simply due to safety during the virus response or because universities switched to e-learning.…
Trust, Talk & the Grieving Process

It’s natural to experience grief when we lose a loved one. While we often associate grief with the death of a loved one, we can also experience it when we get divorced or when ties with a friend become severed.

Everyone experiences grief differently. Some are able to move on, while others are unable to process their loss. This is referred to as “complicated grief” and occurs when an individual remains in a state of acute grief for a prolonged period. It can be so debilitating that professionals may refer to it as a disease.

During complicated grief, symptoms of loss, bitterness or detachment can cause confusion or disorganized thinking, and a whirlpool of emotions. Counseling is sometimes needed to help guide the individual back to calmer waters.

Confiding in someone you trust can be helpful in healing the pain of loss. Estate planning is all about trust and listening. Candid conversations between a grieving client and an estate attorney help the attorney understand what the client has been through.

Listening to clients speak openly provides the attorney with a solid foundation for an estate plan. A deeper understanding of the clients’ grief also makes it possible for the attorney to serve as a resource if they need help with other life challenges.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | www.stephenyimestateplanning.com
Source: www.mayoclinic.org/diseases-conditions/complicated-grief/symptoms-causes/syc-20360374

It’s natural to experience grief when we lose a loved one. While we often associate grief with the death of a loved one, we can also experience it when we get divorced or when ties with a friend become severed. Everyone experiences grief differently. Some are able to move on, while others are unable to…
The Trouble With Family Secrets

When there are secrets within a family, it has been my experience that no good has ever come from them. Now, I am not talking about secrets that a family might keep from non-family members, such as, grandma is a witch and Uncle Joe has 12 toes, but secrets family members keep from each other.

I have gotten many calls over the years that typically start out saying a sibling did this or that with a parent and did not tell anyone about it. Usually the “this or that” involves a large sum of money, ownership of the house, or a change in the trust or estate plan. When the family member discovers this secret, their first reaction is to accuse the sibling of financial exploitation and call my office.

Although secrecy is often a red flag when looking for elder abuse, it alone is not evidence of wrongdoing. Although it can be a sign that a vulnerable loved one is being taken advantage of, it can also just be a signal that open communication is lacking in the family and it is felt that secrecy is needed to spare hurt feelings.

More than once has brother or sister accused each other of misdeeds because the parent wanted to keep peace in the home, and wasn’t honest with each child as to what they were actually getting. When they both have been told the house is going to them and this information is brought to light, finger-pointing and accusations ensue. These claims of wrongdoing eventually seem to come into my inbox and I get to peel away the layers of the truth onion to see why the situation smells bad to certain family members.

AARP has several aids that can help families have open and honest conversations with each other about sensitive matters, such as exploring caregiving options or the distribution of wealth upon the parent’s death. Another resource that is the Kupuna Pono Program with the Mediation Center of the Pacific. Trained mediators (like myself) have experience leading conversations among family members concerning aging issues. It’s been my experience that the only secrets that should be kept among family members are those that involve surprise parties and how your wife’s new hairstyle really looks.

If you suspect elder abuse, call these numbers:
– Police: 911
– Adult Protective Services: 808-832-5115
– Elder Abuse Unit: 808-768-7536
If you have questions about elder abuse, call or email:
808-768-7536 | ElderAbuse@honolulu.gov

When there are secrets within a family, it has been my experience that no good has ever come from them. Now, I am not talking about secrets that a family might keep from non-family members, such as, grandma is a witch and Uncle Joe has 12 toes, but secrets family members keep from each other.
What is a Trust?

A trust is created when a person transfers “stuff” to a trustee who will manage the stuff for the benefit of one or more beneficiaries. “Stuff” includes real property — such as land and buildings — and personal property — such as bank accounts, stocks and bonds, and personal effects. The person who transfers the stuff to the trustee is called the trustmaker. Often, the trustmaker is also the trustee (or perhaps co-trustee) and the initial beneficiary of the trust. The trust agreement between the trustmaker and the trustee sets out the rules about how the trust will be run.

Revocable & Irrevocable Trusts

If the trust agreement says that the trustmaker can revoke it or change it, the trust is called a “revocable trust.” If the trust agreement does not allow the trustmaker to change or revoke it, it is called an “irrevocable trust.” Irrevocable trusts are used in many estate plans to enable trustmakers to make gifts but keep the recipients from having complete control over the gifted assets.

Living & Testamentary Trusts

A living trust is one that is created and funded (that is, stuff is transferred into it) during the trustmaker’s lifetime. It can be revocable or irrevocable, depending on how much control the trustmaker wants to maintain over the trust and its assets. A revocable trust gives the trustmaker complete control, whereas an irrevocable trust gives the trustmaker limited or no control. A testamentary trust is one that goes into effect and is funded following the trustmaker’s death because it is governed by the trustmaker’s last will and testament.

Trusts are often the building blocks of effective estate plans. They provide simplicity, flexibility and predictability in dealing with your assets. Trusts also give you the peace of mind of knowing that you have arranged your affairs to ensure that your wishes will be carried out just the way you planned, and that future transitions (such as your incapacity or death) will be much easier on your loved ones.

If a trust is not already part of your estate plan, talk with your trusted advisors about how a trust might benefit you and your ‘ohana.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
www.est8planning.com
808-587-8227 | maku@est8planning.com

A trust is created when a person transfers “stuff” to a trustee who will manage the stuff for the benefit of one or more beneficiaries. “Stuff” includes real property — such as land and buildings — and personal property — such as bank accounts, stocks and bonds, and personal effects. The person who transfers the…
Is Now a Good Time to Refinance?

Interest rates recently hit all-time lows as the Federal Reserve made cuts to mitigate the financial impacts of COVID-19. If you’re a homeowner with a monthly mortgage payment, you might be wondering if now is a good time to refinance. While a lower interest rate may yield a more affordable monthly payment, there are other factors to consider. Here are seven questions to ask yourself before making the decision to refinance:

1) Will you qualify for a better rate?

The best interest rates are reserved for borrowers with optimal credit. If you are one of the millions of Americans who has filed for unemployment benefits during the COVID-19 outbreak, your employment status is not included in your credit report. However, your credit score can be affected by many factors, such as if you suddenly carry more credit card debt, have missed or made late payments or have applied for new credit during this challenging time.

2) What will your new loan cost?

A lower interest rate and lower monthly payment do not always add up to savings in the long run. Your loan will have closing costs and fees. Factor in prepayment penalties, if applicable. Costs often vary by lender, so it may be a good idea to shop around for the best rate. Talk to your financial advisor or reference one of the many online refinance calculators to help you determine the break-even period, or how long it will take before you realize savings with a new loan.

3) Do you plan to move in the next five years?

The value of refinancing can be diminished when you exit a new loan before you’ve had the chance to recoup closing costs and fees.

4) Will your new loan eliminate lender insurance?

If your home’s market value has increased enough to grow your equity, refinancing with a conventional mortgage can potentially remove private mortgage insurance (PMI) sooner. Federal Housing Administration (FHA) loans require mortgage insurance regardless of equity.

5) Are you trying to get out of an adjustable-rate mortgage (ARM)?

Switching from an ARM to a fixed-rate mortgage can mean more predictable monthly payments.

6) Are you seeking a new term length?

A shorter-term loan may offer better rates, but it can mean a higher monthly payment. This may not be a good time to increase your monthly obligations if your income is threatened by the current situation. On the flip side, you may want lower monthly payments that come with a longer-term loan. It’s important to note you will have to make those payments for many more years, incurring greater expense and reducing your ability to save.

7) Can you afford your current home?

If you’re having trouble making your loan payments, refinancing is not the only way to find relief. As an alternative to refinancing, you might explore downsizing to a property with a mortgage your budget can handle.

These uncertain times reinforce the importance of financial planning. Talk to your financial advisor for guidance on how to build equity in your financial future.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1222, ext. 1240 | michael.w.yee@ampf.com
Michael W. K. Yee, CFP,® CFS,® CLTC, CRPC,® is a Private Wealth Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 36 years. Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services, LLC., a registered investment adviser. Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2020 Ameriprise Financial, Inc. All rights reserved.

Interest rates recently hit all-time lows as the Federal Reserve made cuts to mitigate the financial impacts of COVID-19. If you’re a homeowner with a monthly mortgage payment, you might be wondering if now is a good time to refinance. While a lower interest rate may yield a more affordable monthly payment, there are other…
Needs Planning During a Pandemic

I recently received a call from a concerned parent of an adult special needs child. Her son was recently diagnosed with schizophrenia, refuses to take his medication and has been living on the street. Unable to physically care for her child and experiencing a health scare of her own, she decided it was time to get “her ducks in order” and contacted our office. Her main wish is to continue to provide financially for her son’s present and future care without disrupting his governmental disability benefits. My client’s situation is not unique. According to the CDC, a total of “61 million adults in the US live with a disability;” that’s 26 percent or one in four adults.

Life during a pandemic is difficult enough. It forces us to look at our mortality as well as the mortality of our loved ones. The good news is that for families who have a disabled child or loved one who is receiving or qualifies to receive governmental benefits, it is an opportune time to plan. The SECURE Act recently adopted considerable changes regarding Inherited Retirement Accounts or IRAs. Those who wish to leave their IRAs to a disabled family member or loved one may chose to preserve the IRA for their benefit and stretch its distributions throughout the disabled loved one’s life.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | www.stephenyimestateplanning.com
For more information online about the CDC and disability, go to https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html

I recently received a call from a concerned parent of an adult special needs child. Her son was recently diagnosed with schizophrenia, refuses to take his medication and has been living on the street. Unable to physically care for her child and experiencing a health scare of her own, she decided it was time to…
Cybercrime Claims

One of the most common problem I encounter investigating a cybercrime is that the reporting person and/or victim fail to provide any records and/or documentation to support their claim that they had been victimized — more so in cases involving online fraud.

One of the simplest and quickest methods of documentation is printing out the webpage offer, sale or service. The URL (or webpage address) and the date and time the printout was made will usually be found at the bottom of the page.

Another good practice is to print out any confirmation of sale, receipt of funds and delivery notices, etc. Bookmarking the webpage is also a good record-keeping method.

Solicitations and purchases done via email should follow the same practice. Print out the emails offering the sale of items and/or services. Likewise, print emails reflecting the receipt of funds and delivery notices, etc.

In addition, all emails involving the transaction should not be deleted, but saved in a separate folder.

And finally, obtaining any bank or credit card statements reflecting the transactions would greatly assist in the investigation.

Again, prevention is the key. “If it’s too good to be true…”

THE DEPARTMENT OF THE PROSECUTING ATTORNEY
1060 Richards St., Honolulu, HI 96813
808-768-7400 | Office hrs: Mon – Fri, 7:45 am – 4:30 pm
www.honoluluprosecutor.org/contact-us/

One of the most common problem I encounter investigating a cybercrime is that the reporting person and/or victim fail to provide any records and/or documentation to support their claim that they had been victimized — more so in cases involving online fraud. One of the simplest and quickest methods of documentation is printing out the…
Hiring a Caregiver is Tricky

You may be tempted to treat a caregiver as a “private contractor” in order to avoid the humbug of tax withholding and buying the right insurance policies. You would do so at your peril. The IRS and the state will take the position that the caregiver is an employee, that you are an employer and that all of the legal obligations that attach to those labels apply to your situation.

IRS Publication 926 gives outstanding guidance about employment issues. One of the points raised is the need to verify and document that your prospective caregiver can legally work in the US. On that subject, you can find all of the information and forms you will need on the US Citizenship and Immigration Services website (www.uscis.gov). Or, it may make sense to avoid becoming an employer by working with an agency, which will be the caregiver’s employer and will deal with all of the legalities. What you pay for this kind of service may make the extra cost a bargain. Note that even if you work with an agency that carries worker’s compensation insurance, you should still ask your personal insurance professional whether there is anything else you should do to protect yourself through your homeowner’s and umbrella policies.

Ask your trusted advisors for guidance and check out resources. You will be glad you did.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
www.est8planning.com
808-587-8227 | maku@est8planning.com

You may be tempted to treat a caregiver as a “private contractor” in order to avoid the humbug of tax withholding and buying the right insurance policies. You would do so at your peril. The IRS and the state will take the position that the caregiver is an employee, that you are an employer and…
Publishers Clearing House Scams

In the last couple of months, I have had two people come to my office because they were not millionaires yet. You see, they each had won the Publishers Clearing House sweepstakes (PCH) and had not received their monies yet.

The first case was a gentleman named “Clyde” (not his real name) who was notified by telephone that he won $2.2 million. All he had to do was pay taxes on this amount and the prize money would follow. He was instructed to purchase gift cards and also send cash. Clyde maxed out all his credit cards to purchase the gift cards and cleaned out his life savings to mail the cash. In total, he was out $64,000. He came to my office when the credit card companies started harassing him and wanting payments from him.

The second case involved “Mary” (again, not her name), a retired school teacher who supposedly won $5 million (and two new cars) from PCH. Over the course of a year, with almost daily phone calls from strangers representing themselves as PCH employees, she gave them over $300,000 in cash and gift card numbers. When she was brought into my office by her son, she was still of the belief that she was a legitimate winner. Unfortunately, I had to break the news: My job was to educate her that she was not.

It should first be noted that PCH is legitimate company that was founded in 1953 to sell magazines. In 1967, the company started its sweepstakes to garner publicity and now is known worldwide for its prize giveaways. Because PCH is so recognized for giving away money, many scams have used this company’s name and reputation and fooled thousands of people into believing they won the sweepstakes.

If you have been told you have won, verify with PCH. Do not use the telephone number or email of the person who told you that you won, but speak directly to PCH at 1-800-392-4190. They will confirm if you won or if someone is lying to you.

Lastly, never send money to collect prize money if it is for fees or taxes. It is illegal for any legitimate lottery or sweepstakes company to demand payments for prizes before the money has been given personally to the winner.

If you suspect elder abuse, call these numbers:
– Police: 911
– Adult Protective Services: 808-832-5115
– Elder Abuse Unit: 808-768-7536
If you have questions about elder abuse, call or email:
808-768-7536 | ElderAbuse@honolulu.gov

In the last couple of months, I have had two people come to my office because they were not millionaires yet. You see, they each had won the Publishers Clearing House sweepstakes (PCH) and had not received their monies yet.