Building Legacies that Last Estate Planning and Elder Law

Overlooked Estate Planning Concerns

Business_meeting[1]When people are planning for their estates there are a few often important items that they tend to overlook.

Planning for an estate can be complicated. You need to take stock of all of your assets, figure out what should be done with them, and talk to an estate planning attorney to discuss the best way to make sure those assets are distributed as you desire. When doing that, do not overlook other estate planning issues you might want to address. Otherwise your estate plan may be less effective and comprehensive as it could be.  Check out our website for estate planning fundamentals.

If the attorney does not know about certain issues important to you, then the attorney cannot help you plan for them.

Recently, the Lake County News listed some commonly overlooked issues in "Estate Planning: Important but sometimes unaddressed estate planning issues," including:

  • It is important to decide what should happen with any digital assets you have. State laws differ about how digital accounts should be handled and who can have access to them. Make sure your attorney knows what digital accounts you have.
  • If you want to make sure your pets are taken care of after you pass away, then you need to let your estate planning attorney know that.
  • If you have any dependent adult children still living at home, then you might need to make special plans for them if they are not able to care for themselves.
  • You need to make sure that any life insurance policies and retirement accounts have alternate beneficiaries listed in case the first beneficiary predeceases you.

Schedule a consultation with Profit Law Firm to create an estate plan that covers the basics.

Reference: Lake County News (Nov. 12, 2016) "Estate Planning: Important but sometimes unaddressed estate planning issues."

 

When to Discuss Your Estate Plan: At Holiday Dinners

Bigstock-Family-Portrait-At-Christmas-4881212[1]It is important to discuss your estate plan with your family. Some people struggle over when to do that. They could consider doing so over a holiday dinner, during this holiday season.

One of the most contentious issues many people face is talking about their own deaths and their estate plans with their friends and family. These are typically not the most comfortable of conversations for everyone involved.

Some people would rather just not talk about death. Others are afraid their family will be upset by the estate planning choices they have made. However, nearly all experts agree that one of the essential ingredients to having a successful estate plan and avoiding family fights over the estate is not to surprise family members with your plans. Talking about your estate plan is particularly important in Maryland and the District of Columbia because both states impose a tax on your estate when you die.  Talking about your estate plan with your family so that they know how to handle these estate taxes, helps reduce any family friction on your demise.

If you let them know what your plans are and why you made those plans, they are more likely to accept them. If talking about your plans is uncomfortable for you, then you need to find a good time to do it. At Profit Law Firm, we can incorporate family meetings into the estate planning  process.  Contact us to create an estate plan that protects your loved ones and estate with the harmonious transfer of wealth.

The Street recently suggested one possible time for that conversation in "Thanksgiving Dinner Is a Perfect Time to Discuss Estate Plans."

You read that right.

The article suggests you talk to your family about your estate plan while eating turkey and stuffing. The reasoning is that everyone is normally in a good mood while eating Thanksgiving or any holiday dinner. If that holds true in your family, it would be a good time to discuss your estate plan.

Of course, if your holiday dinner includes a crazy uncle who irritates everyone else, then it might not be the best time to discuss things.

The bigger point is the best time to discuss your estate plan with your family is when everyone is in a generally good mood already. Whenever that happens to be for your family is a good time to discuss your plans.

Reference: The Street (Nov. 15, 2016) "Thanksgiving Dinner Is a Perfect Time to Discuss Estate Plans."

 

Trust Charitable Deductions

Giving-to-charity2[1]Like individuals, trusts have to pay tax on any trust income. Also, like individuals, trusts can take income tax deductions for donations to charity as long as the trust is set up properly.

No one really likes paying income taxes. Almost everyone will seek to pay as little as they possibly can. That holds true for trusts that are required to pay federal income tax on any income from trust assets.

One way to lower the amount of taxes that have to be paid is to donate money to charity and take a charitable donation. Trusts can do that just as individuals can.

However, a recent tax court case contains a warning for trusts as Wealth Management discusses in "Tax Court Disallows Trust's Charitable Deduction for Want of Charitable Intent."

For years the trust in question had made annual distributions to beneficiaries as required. The trust administrators also set aside funds for charity so they could use that money to take charitable deductions on the trust's taxes.

However, when the IRS audited the trust, it balked at the deductions.

The tax court agreed with the IRS.

The issue was that the trust documents contained no language of charitable intent. The court refused to read such an intent into the trust.

What does this mean? If you would like your trust to be able to use charitable deductions to offset trust income, then it needs to be clear in the trust documents that the trust has a charitable purpose in part.  If you want to set up a trust that can make charitable deductions, contact Profit Law Firm.  Schedule a consultation with us.

Reference: Wealth Management (Nov. 7, 2016) "Tax Court Disallows Trust's Charitable Deduction for Want of Charitable Intent."

 

What You Should Have in Your Estate Plan

Bigstock-Financial-consultant-presents--14508974[1]There are a few things that every single estate plan needs to have regardless of the exact legal instruments that you end up using as your primary estate planning tools.

Estate plans can take a variety of shapes. Some estate plans are small and simple. Other estate plans are large and contain many complex legal instruments. However, there are a few things every single estate plan needs to have.

Recently, the Catholic Register discussed what is necessary for all Canadian estate plans in "The must-haves of estate planning." In the U.S. most of the same things are also necessary. They include:

  • Someone needs to be appointed as the executor of your will. Even if the primary instrument to distribute your property is a trust, your plan should still include a pour-over will for which you need to appoint someone trustworthy as an executor.
  • Your estate plan needs to include some basic tax planning, especially if you live in a state that has an estate tax of its own.  Both Maryland and the District of Columbia do, so you need some basic tax planning in both these states.
  • If you have any dependents, then your estate plan needs to provide for their care. While you have some flexibility in your estate, you cannot simply disinherit a spouse or a minor child.  Maryland and the District of Columbia, like other states, allow disinherited spouses to claim an elective share of the estate, regardless of an intent to disinherit.
  • Your estate plan should also include powers of attorney so you can appoint someone to look after your interests if you become incapacitated.

If you have an experienced estate planning attorney create your estate plan, then it will contain all of these things and much more that will make your estate plan as effective as it can possibly be. Schedule a consultation with Profit Law  Firm to get the peace of mind that comes with proper estate planning.

Reference: Catholic Register (Nov. 6, 2016) "The must-haves of estate planning."

 

Avoid Family Disputes in Your Estate Plan

Bigstock-Couple-running-bookshop-13904324[1]One of the main estate planning goals of many people is to avoid having a family fight over their estates.

There are very few things that can be more destructive to a family than a fight over an estate. Once the fight begins it becomes nearly impossible to regain family harmony because of the deep and bitter emotions that battles over estates have. People who know this seek to create estate plans that make family fights less likely.

While it is not possible to avoid all fights, there are some steps that can help.

Recently, the Lodi News-Sentinel discussed some of those steps in "Avoid family fights over inheritance," including:

  • Plan ahead of time. You should have an estate plan in place long before you think you will need one. Sudden deaths happen and it could happen to you. If you have no estate plan, you practically invite your family to fight over your estate.
  • Consider irrevocable trusts. At some point your family might start thinking about what will happen to your estate after you pass away and they might start angling for position in the estate. If you have planned ahead and have an irrevocable trust, then you will not be as easily influenced to change plans to accommodate everyone.
  • Use a professional trustee. Instead of appointing a family member to be in charge of your trust after you pass away, use a professional who will remain independent and treat everyone in the family equally.
  • Hold a family meeting. Bring everyone together and let them know what your plans are and why you made them. Family members who are surprised by your estate plans after you pass away are more likely to argue.

Reference: Lodi News-Sentinel (Nov. 7, 2016) "Avoid family fights over inheritance."

 

 

A Bypass Trust Might Still Be Your Best Option

Bigstock-Senior-couple-standing-togethe-12052331[1]Relatively recent changes to federal estate tax law have made bypass trusts less popular than they used to be. However, they are still good in many circumstances.

It used to be a complicated process for a married couple to get the most out of the estate tax exemption. When one spouse passed away his or her estate tax exemption could be useless if all of the assets went to the other spouse directly. When the second spouse passed away all of the couple's assets would be considered part of his or her estate and the individual estate tax exemption would be applied.

To get around this couples had to get a “bypass” trust of which there were many types. Essentially, the surviving spouse was bypassed in the estate plan.

The relatively new federal law of spousal “portability” changed this and made bypass trusts less necessary. Now, if the paperwork is properly filled out, a surviving spouse can elect to carry over the deceased spouse's estate tax exemption and use it along with his or her own later.

This move essentially doubles the estate tax exemption.

However, there are some situations where a bypass trust is still a good idea as discussed by the Poughkeepsie Journal in "Bypass trust works better for many families."

Many states have estate taxes of their own and they do not all allow spousal portability. For instance, Maryland has a state estate tax and the District of Columbia has a state estate tax. Thus, in Maryland and the District of Columbia a bypass trust is still necessary to take full advantage of estate tax exemptions. A bypass trust can also be used to protect against a surviving spouse getting remarried and having all of the couple's property eventually ending up in the new spouse's family. As a result, bypass trusts are a useful estate tool for blended families, learn more here. They can also be used as a great way to include other family members in the estate plan, especially grandchildren.

If all this sounds a bit confusing, do not worry. That is why there are estate planning attorneys and firms like us.

Tell the attorney what you want done with your possessions after you pass away and let the attorney worry about the best way to accomplish that while minimizing the estate tax burden on your estate.

Reference: Poughkeepsie Journal (Nov. 4, 2016) "Bypass trust works better for many families."

 

Do You Want a Will or a Trust?


Bigstock-Attractive-Mixed-Race-Couple-P-9992345[1]One of the first things that people have to decide when they start thinking about estate plans is whether they want to use a will or a trust. Both have their advantages.

If you start asking your friends and family or look on the Internet for estate planning advice, then you are likely to receive a lot of conflicting advice. Should you get a will or a trust? Nearly everyone seems to have an opinion one way or another.  You can find out more about the basics of estate planning on our website.

Normally, the opinion of non-attorneys is rooted in which of the two options was best for the person giving the advice. It may or may not be the best advice for you.

To help decide the better option to use as the primary legal instrument in your estate plan it is helpful to know the basic differences between the two.

This was the subject of a Motley Fool article titled "Wills vs. Trusts: Which Are Better?"  We also

A will determines who gets your possessions after you pass away. It has no legal effect until then. It is a roadmap for what you want to happen later. The rules for wills vary from state to state, but they need to go through probate court and the details are made public. For people with small estates they can be cost-effective.

Trusts, on the other hand, have legal effect as soon as they are executed. Property is placed in the trust while you are still alive. While trusts can be more costly to obtain and maintain, they do not ordinarily have to go through probate after you pass away and the details are not made available to the public. Trusts are normally preferred to wills for larger estates.

If you are uncertain whether a will or trust is a better option for you, that is okay. You probably should not decide between the two before talking to an estate planning attorney who can help you make the decision. Schedule a consultation if you would like to learn more.

Reference: Motley Fool (Nov. 8, 2016) "Wills vs. Trusts: Which Are Better?"

 

 

Two Basic Types of Estate Planning Documents

Bigstock-Elder-Couple-With-Bills-3557267[1]Estate planning can sometimes seem like it requires a long, complicated list of different documents. It can be helpful to break those documents down into two basic categories.

Once you start planning for your estate you can quickly get bogged down trying to figure out what all of the different estate planning documents are. There are all sorts of different legal documents that are not familiar to most non-attorneys. This often confuses people enough that they give up and delay getting an estate plan.

However, it does not have to be that complicated.

A good way to think about the different documents is to put them into two basic categories, as the Motley Fool discusses in "The Estate-Planning Documents Everyone Needs."

The first type of estate planning document determines what happens to your belongings after you pass away. This category includes wills, most trusts and even things like a retirement account that has a beneficiary designation.

The second type of estate planning document determines who takes care of your affairs if you are not able to do so. This category includes powers of attorney and advanced health care directives.

Who do you want to have your possessions after you pass away and who would you like to take care of your affairs if you cannot? Answer these questions, and then go to an experienced estate planning attorney. Schedule a consultation with Profit Law Firm, LLC. Tell the attorney your answers, and let the attorney figure out the documents you need to give your answers legal effect.

Reference: Motley Fool (Nov. 7, 2016) "The Estate-Planning Documents Everyone Needs."

 

You Are Not Done When You Get an Estate Plan

Business_meeting[1]Getting a formal estate plan from an attorney is not the final step to prepare for your estate. Estate planning is a lifelong process.

If you have taken the important steps of going to an estate planning attorney, discussing your wishes for your estate, having the attorney craft your plans and executing those plans, congratulations. You have done what far too few Americans do and have planned for how your estate will be handled. You have taken the necessary steps to make sure that if anything happens to you, your loved ones will be taken care of according to your requests.

However, do not think you are done with everything forever.

It is extremely important that you update your estate plan when necessary as the Verde News discusses in "Updating Your Estate Plan: When You Should Review It."

It is impossible to list all of the possible times your estate plan should be updated.

Plans need to be changed whenever there are significant changes in circumstances. That can include changes in your financial situation, death of an important person in your estate plan, changes in estate law and much more.

Estate planning attorneys suggest that you review and change your plans anytime you experience a substantial change in life circumstances. It is also suggested that you review your estate plan every few years and talk to your estate planning attorney to make sure no laws effecting your plan have changed.

If it has been awhile since you have updated your estate plan, then call and schedule an appointment to have your plan reviewed.

Reference: Verde News (Oct. 29, 2016) "Updating Your Estate Plan: When You Should Review It."

 

Steps to Get an Estate Plan

Bigstock-Vintage-brass-telescope-on-ant-44347372[2]Getting an estate plan often seems more difficult than it is. If you follow a few basic rules and steps, then you can get a good estate plan with little hassle.

Many people have the mistaken idea that getting an estate plan is an overly complicated process. They let this idea stop them from doing their own planning and they just keep putting things off.

However, estate planning does not have to be complicated.

Recently Personal Liberty offered some tips to simplify things in "Nuts and Bolts of Estate Planning," including:

·         Organize all of your financial and asset documents so you know what you have and what you need to plan for.

·         Make the important decisions about who you want to have your assets and how much everyone should get.

·         Think about how your heirs might disagree and how any conflicts can be avoided.

·         Your plan does not need to be perfect. You will not be able to create a plan that pleases everyone completely.

·         Whenever possible keep your plans flexible so they are easy to change when circumstances change.

·         Make sure you are choosing responsible people to act as your executor and trustees.

·         Do not surprise your heirs with too much. If you are planning something unusual, it is a good idea to let them know.

An experienced estate planning attorney can help you avoid missteps.

Reference: Personal Liberty (Oct. 28, 2016) "Nuts and Bolts of Estate Planning."