Every year thousands of wealthy people temporarily move from their cold, northern homes to residences in warmer states. Many consider making their warmer homes their permanent residence, especially as they grow older.
Given the choice, many people would much rather live in the warm, sunny climates of states such as Florida and Arizona instead of the colder climates of northern states. However, for most people, that is not an option since they have good jobs they cannot leave in northern states.
Some of them, however, are able to maintain residences in warmer states where they can live during the winter. As they near retirement, many consider switching residences completely and making their southern home their permanent home.
This is reported by the Middletown Transcript in “MAKING CENTS: From snowbird to flamingo.”
What many people do not realize is that if they change their state of residence, then they may also need to change their estate plans.
An estate plan crafted by an expert estate planning attorney is created with your individual state of residence in mind and making sure that state laws are followed. The estate plans are designed to work for the individual states. That means they may need to be changed to reflect the laws of a new state of residence.
If you do move to Florida or Arizona, or any other state, make sure to see a local estate planning attorney so your estate plan can be changed to take advantage of your new state’s laws.
Reference: Middletown Transcript (Jan. 17, 2017) “MAKING CENTS: From snowbird to flamingo.”
Do not be confused about what estate planning is and whether or not you need to do it.
Most Americans do not have estate plans. One of the reasons that they don’t is confusion about what getting an estate plan means and who should have them. The term "estate" often conjures up images of the palatial estates of the ultra-wealthy. However, the term applies to the property of anyone who passes away.
We all have estates. For that reason, it is important to know what estate planning actually does.
Recently, the Vail Daily discussed some basics in "Estate Planning."
If an estate is the property you have when you pass away, then estate planning is deciding what should happen to that property. It is you deciding beforehand who you want to have your property and the legal means by which they will receive it.
The two most common methods to have your property distributed are through wills and trusts.
A will is a legal document that is submitted to a court. The will sets out who should receive what. If the will is valid, the court will oversee the process of making sure that the property goes where you want it to.
A trust creates a new legal entity to hold and distribute property. It is not normally submitted to a court, unless it is a “testamentary” trust created under a will to manage the estate distribution. Another person known as a trustee, is charged with making sure that your directions are followed.
There are other aspects of estate planning you should address, including planning for your own end-of-life care. Visit an estate planning attorney if you have questions about wills, trusts, or any other aspects of estate planning. Profit Law Firm works with clients to find their goals and wishes and create plans that implement their desires.
Reference: Vail Daily (Dec. 8, 2016) "Estate Planning."
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."
Roughly half of Americans will pass away without estate plans even if they know they should have one. Why do people not make plans they know they should make?
You have heard time and time again that if you do not have an estate plan, then you do not get to decide what happens to your property after you pass away. Who gets what will be determined by state laws. You also do not get a say in who should look after your minor children. That will be determined at the sole discretion of a court.
Most people are aware of these facts and know that they should do some formal estate planning because of them.
However, only about half of Americans ever bother to do that estate planning. Too many people pass away having constantly thought they could always wait to plan their estates. They ended up waiting until it was too late.
The Sabetha Herald recently discussed why people put estate planning off in “Procrastination Factor — Why we avoid any estate planning.”
The biggest reason is that many people would prefer not to think about their own deaths. To begin the estate planning process you need to contemplate a time when you will no longer be alive and that is an uncomfortable thing to think about. Another big reason is that family members often discourage people from estate planning. They would rather not think about a time when their loved ones will no longer be around.
The problem is that death is unavoidable.
You should not let uncomfortable thoughts stop you from taking the necessary steps to prepare. In fact, if you visit an experienced estate planning attorney, you will probably find that planning for your estate is not nearly as uncomfortable as you imagine it to be. We listen to our clients, and work with them to develop a plan that protects their three biggest treasures, their family, their business and their assets, as harmoniously as possible.
Reference: Sabetha Herald (Nov. 14, 2016) “Procrastination Factor — Why we avoid any estate planning.”
You are going to die, so it is important to be prepared for it. However, do not be taken in by some common estate planning myths.
At some point in the future, you will pass away. That is an undeniable fact.
You might think that if you live long enough medical science will advance to the point people can live forever. The truth is, however, that current medical science is nowhere close to making that happen and it will not be for a long time, if ever.
So, now that you know the facts, it is important to make sure you are prepared and have an estate plan.
It is also important that you not be taken in by a couple of common estate planning myths as WSBT 22 discusses in “Special Report: Are you properly prepared for death?”
The first myth is that if you do not have an estate plan, then your family is doomed. All of your property will go to the government and your children will end up in foster care.
That simply is not the case.
Your property will go to your closest living relatives and the court will make sure your children receive proper care, which normally means they will live with a suitable relative. However, if you do not have an estate plan, then it is the government and not you who decides what happens to your property and children.
The second big myth is that you can get an effective estate plan by downloading a form from the Internet. Most of the time any money saved by downloading a form is lost due to problems that the form will later cost your estate. Our site provides some information on estate planning fundamentals.
There are no substitutes for an experienced estate planning attorney.
Reference: WSBT 22 (Nov. 14, 2016) “Special Report: Are you properly prepared for death?”
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.”
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.”
Many children with aging parents know that their parents should do estate planning, but convincing their parents of that can be difficult.
Many elderly people in the U.S. believe estate planning is something only the very wealthy need. If they only have a few major assets and modest back accounts, then they believe estate planning is unnecessary for them.
Many of their adult children know better, however.
The children know estate planning is an important responsibility for everyone regardless of wealth. While those children would like to talk their parents into estate planning they may find it difficult. In the Washington Metropolitan area, estate planning is very important. Maryland estate planning is critical because Maryland has both a state estate tax and a state inheritance tax. The District of Columbia also has a state estate tax.
This topic was addressed by NJ 101.5 in “Talking to your parents about a will.”
If you find yourself having this problem with your aging parents, there are some steps you can take.
First, explain to your parents that without an estate plan their estates will have to go through probate and everything will be distributed according to state law and not your parents’ wishes. That means if they would like to leave something directly to their grandchildren, they will not be able to do so in most cases. It also means that they might be subject to Maryland or D.C estate planning axes.
You can also talk to your parents about how costly and time-consuming probate can be and how it could be a burden on the family.
If all else fails and you can afford it, you might offer to pay for your parents to visit an estate planning attorney. They do not have to commit to anything before seeing the attorney, but the attorney can discuss the benefits of estate planning with your parents and give them some options. At Profit Law Firm, we also conduct two generation family planning sessions. Contact us for a consultation with Maryland estate planning attorneys and DC estate planning attorneys.
Reference: NJ 101.5 (Nov. 1, 2016) “Talking to your parents about a will.”
Many people struggle with the question whether it is better to leave their children an inheritance or not. It is not an easy question to answer.
Recently, FOX Business reported on a survey that found some 23% of retired Americans would prefer to spend all of their money and not leave their children an inheritance in "Should You Leave Your Kids an Inheritance?"
They asked Dave Ramsey for his opinion on the subject. Ramsey suggested that if you have bad kids, then, leaving an inheritance for them just rewards their misbehavior. He went on to say that if you have good kids, then not leaving them an inheritance teaches them money is evil. However, that is not the entire story.
It is understandable why a parent would not want to leave an inheritance to a child who has an unhealthy lifestyle. No parent wants to give a child money that would just fuel a drug habit, for example.
With good estate planning, however, a parent can actually leave an inheritance that encourages the misbehaving child to straighten up and does not give the child funds for bad behavior.
Another possibility is to skip the child with bad habits or behaviors and instead give the inheritance to grandchildren or other relatives.
There are several options for estate planning around a misbehaving adult child.
Visit an estate planning attorney to learn more about them and how you can use them.
Reference: FOX Business (Oct. 12, 2016) "Should You Leave Your Kids an Inheritance?"