What policies President-elect Trump chooses to pursue and whether they prove to be successful or not, could have a dramatic impact on charitable giving.
Whether it is to set up a lasting charitable legacy or to avoid paying the estate tax, creating plans for charitable giving has always been an important part of estate planning. After the unexpected results of the Presidential election, it is not clear exactly how estate planners will deal with their clients' charitable wishes. It is actually not clear which policies President-elect Trump will pursue after his inauguration that will have an impact on charitable giving.
Bloomberg looked at some of the possibilities in "Where Charitable Giving May Head With Trump."
Trump has stated that he will increase GDP growth by 4% per year, which would likely lead to more charitable giving. However, many economists doubt he will be able to fulfill that promise due to economic and demographic circumstances which are beyond his control.
The President-elect campaigned on cutting taxes, especially on the wealthy. This would also likely increase giving to charity. However, his nominee for Treasury Secretary has cast some doubt on those tax cuts, by recently stating that any cuts on the wealthy will be offset by reducing deductions.
It is also thought that Trump would like to eliminate the estate tax. This could reduce some charitable giving, at least when the impetus for the giving is to shrink the value of the estate.
Some of this uncertainty should be cleared up soon, when the President-elect begins submitting budget proposals to lawmakers. They should give an indication of what policies he will pursue.
Reference: Bloomberg (Nov. 27, 2016) "Where Charitable Giving May Head With Trump."
There are many reasons why you should get an estate plan, but one of them stands out above the others. Estate planning is the best way to make sure that your family does not have problems after you pass away.
Too many people think getting an estate plan implemented is an unnecessary and time-consuming bother. It is true that properly planning for an estate requires gathering up all of your financial documents, thinking about where you want all of your property to go and spending time meeting with lawyers. Almost everyone can think of other more enjoyable things that they would rather do with their time.
However, there is a very good reason to make the effort now and get an estate plan as J Weekly suggests in "Estate planning wards off problems later on."
If you think estate planning is difficult and time-consuming for you now, imagine how difficult it will be for someone else to do it after you pass away. It is very likely that a close family member will have to figure out what property you have and go to court to figure out who should get all of your property.
To give just one example of how difficult this can be, you can now easily go to your bank and get all of the information you need concerning your accounts. Your children cannot do that easily now and they would not have an easier time of it after you pass away, unless they have a court order requiring the bank to give them the information.
Getting that court order will, of course, be time-consuming and require the hiring of an attorney for assistance.
Any way you look at it, taking the time to get an estate plan now will be less expensive and less time-consuming than it will be for your family to figure things out if you do not get an estate plan.
Reference: J Weekly (Dec. 1, 2016) "Estate planning wards off problems later on."
Although wills and trusts have been standard legal documents for a long time, many people still have misconceptions about them.
Estate planning can be complicated by the fact that many people have misconceptions about the basics of wills and trusts and what having either one of them means. This problem is compounded by the Internet as people who are wrong, often share their misconceptions with other people online. The result is more confusion.
Recently, TCPalm discussed common misconceptions in "Common misconceptions about wills and trusts," including:
- Having a will means that your estate does not have to go through probate. This is completely false. In most cases, wills have to be submitted to a probate court for administration in both Maryland and the District of Columbia.
- If your estate is not large enough to pay the estate tax, then you do not need to have a will or trust. This is another falsehood since there are many other reasons to have a will or trust. The most important is that if you do not, then all of your property will be distributed according to statutory rules instead of how you might have preferred it to be distributed.
- By putting your assets in a revocable trust, you lose the ability to have any control over the assets. This is not true. If you are the trustee of your trust and the trust is drafted properly, then you will still be able to do whatever you want with your assets during your lifetime.
- You have to file a separate tax return for your revocable trust. This is also not true. As long as your trust is properly drafted, a revocable trust will not be considered a separate legal entity during your lifetime and you will not need to file a separate tax return for it.
- Another misconception about revocable trusts is that they reduce your tax burden. They do not. Some irrevocable trusts do that. Call Profit Law Firm for a consultation and advice on using revocable trusts and irrevocable trusts.
Talk to a qualified estate planning attorney who will be more than happy to educate you on the realities of estate planning.
Reference: TCPalm (Dec. 2, 2016) "Common misconceptions about wills and trusts."
If you have a trust and would like to make it the beneficiary of your IRA instead of an individual, you can do so. However, there are some important things to consider before doing so.
When people get trusts, one of the first things they are told is that they should put all of their important assets into the trust. They are often told that they can designate their trusts as beneficiaries of their life insurance policies and retirement accounts, and that they should consider doing so.
However, for tax purposes, it is not always a good idea to designate a trust as the beneficiary of your IRA, as Financial Advisor explains in “Is Naming A Trust As Beneficiary Of A Client’s IRA A Good Idea?”
The biggest and most important issue is that IRA beneficiaries must take required minimum distributions or face tax consequences. This requirement does not go away when the beneficiary is a trust and not an individual.
Satisfying the requirement with a trust can get technical.
Every beneficiary of the trust must be identifiable and must be an individual. While that might seem easy to accomplish, it is not always the case. Every successive beneficiary must be an identifiable individual. Therefore, the beneficiaries who would automatically receive the trust assets when a previous beneficiary passes away, must be an identifiable individual.
This can be an issue if a residual clause in the trust includes giving assets to a charity, for example.
That is not the only complication with designating a trust as the beneficiary of an IRA. There are other potential problems, which is why you should consult with an estate planning attorney before doing so.
Reference: Financial Advisor (Dec. 2, 2016) “Is Naming A Trust As Beneficiary Of A Client’s IRA A Good Idea?”
Many family dynasty trusts created during the Great Depression to avoid rising taxation, will automatically terminate soon. Trustees and beneficiaries need to be prepared.
One of the lasting legacies of the Great Depression will soon come to an end. In response to that crisis, the government greatly increased the gift and estate tax rates. Wealthy families responded, in turn, by creating dynastic trusts to hold their wealth and preserve it for future generations.
Most of the trusts created at that time have mandatory termination dates at which time the trust assets must be distributed to the residual beneficiaries.
Successfully carrying out that process will require some planning as the Wills, Trusts & Estates Prof Blog explained in “Preparing for Trust Termination.”
The first challenge for many trusts and trustees will be determining the residual beneficiaries. In many cases, they could be distant relations of the original trust settlors and not the same people who currently receive regular distributions from the trusts.
Once the beneficiaries are determined, they will need to plan for how receiving the trust assets, will impact their lives and financial futures. Depending on the amount of money received, the beneficiaries’ tax and estate plans could change dramatically.
Those who do not plan appropriately, could face negative consequences that could have been avoided.
If you are a residual beneficiary of a depression era trust, you should seek independent legal advice. It might not be a good idea to rely on the advice offered by the trustees and their legal advisors. Profit Law Firm, LLC can provide an independent consultation.
You need an attorney who will be acting only in your interests.
Reference: Wills, Trusts & Estates Prof Blog (Dec. 5, 2016) “Preparing for Trust Termination.”
Drafting your own will or using a form that you purchased online to create a will, might seem like a good idea that will save you money. However, those wills often fail to do much more than create large legal bills in probate.
Wills often sound like simple legal documents. In a sense, they are. They are just a legal way to write down who gets your possessions after you pass away.
When it comes to estate planning generally, wills are among the simplest ways to express your parting wishes. However, the truth is that wills are only simple from an estate planning attorney’s perspective. They are not so simple that anyone can just write their own wills or purchase a form online to fill in and use as a will.
Those homemade wills do not always work very well for a variety of reasons, as the Huntsville Item explains in “A humorous look at the danger of homemade wills.”
Some homemade wills do not work for very simple reasons of formalities. In most states, executing a will requires that a specific number of people be present to witness the will being signed.
People who create their own wills often fail to either have the right number of people present or they do not leave any indication of how a court can contact the witnesses, if necessary.
Other homemade wills do not work for less technical reasons. The directions in these wills are often contradictory or impossible to carry out.
Getting a will does not have to be a complicated process but it should begin with hiring an estate planning attorney.
Reference: Huntsville Item (Nov. 27, 2016) “A humorous look at the danger of homemade wills.”
If you receive an inheritance, it should not put you in a worse position than you were before. That happens all too often.
A common myth about people who inherit wealth is that it brings them financial security and they no longer need to worry about money. However, as is the case with people who win the lottery, people who suddenly inherit wealth are often soon in a worse financial position than they were previously.
Most of the time, inheritances do not grow a person’s or a family’s wealth.
They end up subtracting from it as Chase News & Stories reports in “How to make sure your inheritance is a boon, not a bust.”
The biggest problem is overspending, especially on unnecessary things. While it might be fine to splurge on one or two things, spending can quickly snowball until there is nothing left. There is always something more that can be purchased and heirs who are not careful, keep purchasing those somethings.
The best way to prevent this is to plan ahead.
Talk to your older relatives about what inheritance you might receive from their estate plans and ask for guidance in wealth management. Your relatives who have wealth, can teach you how they maintained that wealth.
If you do not know ahead of time that you will receive a large inheritance and get one suddenly, then you can still make plans if you are patient. Do not do anything with the inheritance for at least six months. You should take that time to think carefully and to get good financial advice.
Reference: Chase News & Stories (Nov. 23, 2016) “How to make sure your inheritance is a boon, not a bust.”
If you want to be remembered for charitable giving, then you should get started with an estate plan.
At this time of year, it can seem like giving to charity is something done with little forethought. It can require no more than dropping loose change in a bell ringer’s bowl at the grocery store or putting a new toy in a designated box at the mall.
While anonymous giving like that is helpful, having a true charitable legacy requires more work and considerable forethought.
People who want to be remembered for being charitable benefactors, need to get comprehensive estate plans as the Port Huron Times Herald explains in “Plan today to make a difference tomorrow.”
With an estate plan, you can set up your charitable giving to be ongoing after you pass away. If you want, you can leave one time gifts in your plan but also create new legal entities that will continue to give to charity indefinitely. You can even dictate what charities these entities will give to and for what purposes. In essence, an estate plan gives you much greater control over how and what your charitable giving will accomplish.
The entities you use to accomplish charitable giving can be relatively simple trusts or they can be complex family foundations. We provide more information on charitable giving on the Profit Law Firm, LLC website.
Without proper planning, however, creating a charitable legacy is nearly impossible. Attempts to do so can easily fall afoul of the law and IRS regulations. Thus, if you would like to leave a charitable legacy, consult with an estate planning attorney to review your options. Profit Law Firm can help inform you about the various charitable trusts you can use to accomplish your goals.
Reference: Port Huron Times Herald (Nov. 25, 2016) “Plan today to make a difference tomorrow.”
When an elderly parent is approaching the end of life, the ability of the family to come together and agree on treatment and care is vital to ease the parent's suffering.
The last thing that most end of life patients want to deal with, is a family feud over the patient’s medical treatment and care. However, these family feuds are a common occurrence, especially when family members have other, pre-existing disagreements.
This was the subject of a recent article in the Washington Post titled "A united family can make all the difference when someone is dying."
Doctors have a name for one of the common problems that can arise. They call it the "Daughter from California syndrome." This can happen when family members compete with each other over who cares for the elderly patient the most. Often, someone who lives far away goes too far and is the source of disruptions.
Another source of problems for families is when the person who the patient put in charge of things goes too far and refuses to cooperate with others. For example, someone given authority in a health care power of attorney may refuse to listen to the opinions of other family members. This can create unnecessary tension, especially when decisions have to be made that are outside the scope of any advanced directives.
The best thing that a family can do to help an elderly patient at the end of life is to work together, communicate freely and come to consensus decisions concerning treatment and care. The patient can help this greatly, if he or she has previously executed detailed advanced directives that designate appropriate people to be in charge.
Reference: Washington Post (Nov. 20, 2016) "A united family can make all the difference when someone is dying."
Before you get remarried late in your life you should do some estate planning. Profit Law Firm has information on how you can do estate planning to protect everyone in your new blended family.
People who are at or near retirement age are getting remarried more often than ever before. Most elder advocates think it is a wonderful thing that people are finding love and comfort late in their lives.
However, there is a potential problem.
Not enough older people getting remarried are properly planning for what doing so will mean for their families and estates. Without proper planning things can quickly go awry as New Hampshire Magazine reports in “Navigating Late-Life Remarriage.”
The biggest problem is that people do not take the time to consider what a second marriage might mean for their children’s ability to receive an inheritance. Children from an earlier marriage can be left out of an estate entirely without planning.
By default, a person’s entire estate goes to a living spouse. It cannot be assumed that the spouse will make plans to leave anything inherited for stepchildren in his or her estate. There is no legal obligation for the spouse to do so and the law will not give the money to those children if the spouse passes away without an estate plan.
This, of course, does not mean that someone should not get remarried late in life. It just means that some planning needs to take place before doing so, in order to protect children. P
Before getting remarried visit an estate planning attorney who can assist with the proper legal plans to make sure your children are protected.
Reference: New Hampshire Magazine (Dec. 2016) “Navigating Late-Life Remarriage.”