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Category: Estate Plans

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Moving to Another State and Your Estate Plan

I Website-photo-state-incentive-page[1]f you move to another state, you should review your estate plan to make sure that it will still work.

Americans often move from state to state, especially after they retire. The laws in most states are similar.  However, there are sometimes minor differences that can have a big impact on estate planning.

That leaves many people wondering whether an estate plan they drafted in one state, will still be valid if they move to another state. The answer is “maybe,” as The Times Herald discusses in "Moving can affect your financial planning."

Generally speaking, if a will you had drafted was valid in the state in which it was drafted at the time it was drafted, the other states will consider it to be valid.

Trusts are valid in every state,  since the state in which they were created always governs over the trust.

Most of the time your estate plan will be valid in your new state.  However, there can be some issues, especially if you purchase real estate in your new home state. Some states have particular rules about how real estate has to be handled.

You should also be aware that your new state could have tax laws that are different than your old state. Something you have done in your estate plan might still be legal and valid, but it might not be tax-wise.

At a minimum, you should visit an estate planning attorney in your new state and let the attorney review your estate plan.

The attorney can tell you whether you should do something different to adapt to the laws of your new state.

Reference: The Times Herald (Dec. 1, 2017) "Moving can affect your financial planning."

 

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Incapacity Planning

MP900442500[1]It is important that you make plans for what will happen to your family and your possessions after you pass away. It is also important to plan for what will happen to them, if you are incapacitated.

You might be aware that you need a will or a trust, so you can make sure your family is taken care of after you pass away. Getting a will or trust also lets you determine what happens to your property after you pass away.

If you have not done so, you really should see an estate planning attorney to get a will or trust as soon as possible, just in case.

While you are at the attorney’s office, you should also get plans for what might happen if you become incapacitated, as the Times Herald-Record discusses in “Make plans in case you are incapacitated.”

The issue is that if you are incapacitated, someone else needs the legal authority to act on your behalf.

Someone will need to be able to handle your bills and to make medical decisions for you, should it be necessary.

If you do not plan ahead, it can be a difficult process for someone else to get the legal authority.

Someone will have to hire an attorney and go to court to get a judge’s permission to act as your guardian.

Fortunately, planning for what will happen if you become incapacitated is not difficult.

You just need a general durable power of attorney and a health care power of attorney.

The estate planning attorney can prepare both of them for you.

Reference: Times Herald-Record (Dec. 12, 2017) “Make plans in case you are incapacitated.”

 

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Children and Inherited Retirement Accounts

Bigstock-Large-Mixed-Race-Family-2589417_(2)[1]If your children inherit your retirement accounts, they will have a few options about what to do with them.

Most people designate their spouses as the beneficiaries of their retirement accounts after they pass away. Consequently, the surviving spouse then becomes the owner of the accounts and can use the account in the same way that the deceased spouse did.

However, sometimes people name non-spouse beneficiaries, such as their children or the children end up receiving the accounts after the designated spouse passes away.

What the children can do with the accounts is not as simple as it is for spouses.  However, there are a few options.

The Wills, Trusts & Estates Prof Blog discusses some of these options in "What Your Kids Can Do When They Inherit Your Retirement Accounts."

The options include:

  • The assets in the account can be taken out immediately as one lump sum.
  • The assets in the account can be taken out whenever needed, as long as the account is empty within five years.
  • The children can choose to stretch the account out over their own expected lifetimes. However, they will need to make annual required minimum distributions and must take the first one by a set time.

If you have questions about your retirement accounts and your heirs, then talk to an estate planning attorney to get answers. While you are at it, learn more about how your retirement accounts can be used as part of an overall estate plan.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 22, 2017) "What Your Kids Can Do When They Inherit Your Retirement Accounts."

 

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Plan for Death to Live Better

Bigstock-Family-Portrait-At-Christmas-4881212[1]It might not seem intuitive.  However, if you make plans for your death, you can sometimes live a better life.

People do not ordinarily engage in “death” planning. We tend to think there might be something wrong with people who do.

We might think they are overly morbid, if not suicidal.

If they are a friend or family member, we might even encourage them to get professional help. However, there is a type of death planning that is good and one people should consider doing.

In fact, it can help them live more fruitful lives, as the Wills, Trusts & Estates Prof Blog explains in "How Planning For Your Death Can Help You Live A More Purposeful Life."

What is meant by good death planning is planning for what will happen to your assets after you pass away and planning for how you want to be remembered after you are gone.

We call these “estate” planning and “legacy” planning.

Estate planning starts with deciding who you want to have your assets and personal possessions after you pass away. After that, you can go to an estate planning attorney who will prepare legal documents to make your wishes enforceable.

Legacy planning is not quite as simple. It requires thinking about what is important in your life and figuring out how to impart that to the people you will leave behind.

If you do undertake estate and legacy planning, then you will have a better understanding of what will happen after you pass away.

That, in turn, will help you to live better now.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 23, 2017) "How Planning For Your Death Can Help You Live A More Purposeful Life."

 

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Wealth Planners

MP900448494[1]Wealthy people have so many different advisors for different aspects of their lives, that it is often a good idea to hire someone who can coordinate all of them and keep them on the same page.

If you have a lot of money, it is likely that you pay a lot of people to manage various aspects of your wealth.

You have financial advisors. You have business consultants. You have accountants. You have estate planning attorneys. You have business attorneys. You have a lot more than that.

It can be difficult to keep all of your advisors coordinated and all working toward the same goals.

The advice you get from the different advisors can be contradictory.

While it is good to get a variety of opinions, it might be a good idea to hire someone to help you manage it all, as Forbes discusses in "Estate Planning For the Ultra Wealthy – The Role of A Family Wealth Advisor."

The idea is fairly simple.

Estate planning attorneys who have the expertise to plan how wealth can be transferred down within families for generations can also act as wealth planners. They coordinate the activities of all of the other advisors and make sure the wealthy client's ultimate estate planning goals are always kept in mind.

Estate planning attorneys can make sure that the other advisors are all working toward the one ultimate goal.

Not everyone needs a wealth planner.

Those that do would be well advised to talk to their estate planning attorneys about the benefits of having one.

Reference: Forbes (Aug. 29, 2017) "Estate Planning For the Ultra Wealthy – The Role of A Family Wealth Advisor."

 

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Endowments of Closed Schools

Every year wealthy people give money to the endowment funds of colleges and universities. What happens to the money, when a school closes its doors for good is complicated.

Some big name schools have gigantic endowment funds. Schools like Harvard and Yale have many wealthy alums who are happy to give to their alma maters.

However, wealthy people do not just give to their own former schools.

They often contribute to much smaller colleges and universities, with the hope that those schools can use the funds to educate younger Americans.

Some schools do not make it. In fact, this has increasingly been the case since the financial collapse in 2008.

MP900382688[1]Every year, hundreds of schools close their doors permanently but still have money in their endowment funds.

The Wills, Trusts & Estates Prof Blog recently discussed what happens to that money in "Orphan Endowments of Dead Schools Bedevil U.S. States."

The big problem?

When a school closes there are many people who would like to have the money that is left over in the endowment funds.

The descendants of wealthy donors would like to have the money, as would the bondholders and other creditors of the schools.

The Attorney General of the state has to figure out who gets the money and state laws are not always clear on the subject. That creates big headaches for people over what are often relatively small sums.

If you or an ancestor of yours has given money to a small school that has closed, you should know that you can try and get that money back.

Nevertheless, you should know that you are unlikely to be successful.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 17, 2017) "Orphan Endowments of Dead Schools Bedevil U.S. States."

 

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Same-Sex Couples Estate Planning

Same sexWhen the Supreme Court ruled that same-sex couples have a Constitutional right to get married, many problems those couples faced were finally resolved. For the first time, gay couples had legal protections in case one of them passed away.

The laws of intestate succession would protect them, in case they did not have an estate plan.

Couples were also given more rights to information about the health of the other, so they could assist in the treatment plan if one or the other of them got seriously ill.

However, not all potential estate planning issues for same-sex couples are fully resolved, as Cleveland Jewish News discusses in "Same-sex couples could face estate planning road blocks."

One of the biggest problems remains child custody.

Prior to legalizing same-sex marriage, it was not normally allowed for both partners in a same-sex relationship to be put on the birth certificate of a newborn.

This has important implications for any children born prior to the Supreme Court's decision.

The automatic right of custody of children in the event the spouse whose name is on the birth certificate passes away, cannot be assumed for the other spouse.

Of course, this is an ever bigger problem for same-sex couples who have chosen not to get married. They still have all of the other potential issues that existed previously.

It is extremely important that same-sex couples see an estate planning attorney.

The law is more favorable than it used to be, but it is not yet perfect at protecting their rights.

Reference: Cleveland Jewish News (Sep. 9, 2017) "Same-sex couples could face estate planning road blocks."

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Estate Planning Is Ongoing Process

MP900439295[1]It is not enough to get an estate plan once and leave it alone for all time. It needs to be constantly reviewed and updated to take account of changing circumstances.

Some people can get away with getting an estate plan once and never looking at it again. If someone never gets divorced, remarried, has more children or increases assets, then the first estate plan they get might be good enough for the rest of their lives.

This is true, even if that estate plan was written 50 years before the person passes away.

However, most people's lives are not that constant.

In fact, most people have significant changes in their lives as they get older.

When things change, then estate plans normally need to be changed as well, as Forbes discusses in "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

The more wealth that you have, the more often you will probably need to change your estate plan.

This is because your assets will grow, how you hold those assets will change and tax laws will also change.

Nevertheless, it is not just the wealthy who need to constantly review and update their estate plans.

Everyone should do so, whenever there is a significant change in their lives that should be reflected in an estate plan.

Examples of these changes include divorce, remarriage, a new child, a new higher paying job, a new grandchild and much more.

If you have not changed your estate plan recently, then take a look at it.

Ask yourself whether it still does what you want it to do, given all the changes in your life.

If the answer is no or even maybe not, then talk to an estate planning attorney.

Reference: Forbes (Sep. 6, 2017) "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

 

 

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Estate Planning Is Ongoing Process

MP900439295[1]It is not enough to get an estate plan once and leave it alone for all time. It needs to be constantly reviewed and updated to take account of changing circumstances.

Some people can get away with getting an estate plan once and never looking at it again. If someone never gets divorced, remarried, has more children or increases assets, then the first estate plan they get might be good enough for the rest of their lives.

This is true, even if that estate plan was written 50 years before the person passes away.

However, most people's lives are not that constant.

In fact, most people have significant changes in their lives as they get older.

When things change, then estate plans normally need to be changed as well, as Forbes discusses in "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

The more wealth that you have, the more often you will probably need to change your estate plan.

This is because your assets will grow, how you hold those assets will change and tax laws will also change.

Nevertheless, it is not just the wealthy who need to constantly review and update their estate plans.

Everyone should do so, whenever there is a significant change in their lives that should be reflected in an estate plan.

Examples of these changes include divorce, remarriage, a new child, a new higher paying job, a new grandchild and much more.

If you have not changed your estate plan recently, then take a look at it.

Ask yourself whether it still does what you want it to do, given all the changes in your life.

If the answer is no or even maybe not, then talk to an estate planning attorney.

Reference: Forbes (Sep. 6, 2017) "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

 

 

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Estate Planning Is Important

Bigstock-Family-Portrait-At-Christmas-4881212[1]You cannot merely tell your family what should be done with your assets after you pass away. You need to go through the process of getting a formal estate plan drawn up.

Many people are under the impression they do not need to get a formal estate plan, because they can rely on their family to divide up their assets after they pass away without any problems. They think if they just give family members some directions about who should get what, then the family will reliably carry out those wishes.

While we all would hope that we can rely on our families in this way, there are legal and practical reasons why it is unwise to do so and why people need to get a proper estate plan.  This was discussed in a recent Fontana Herald News article titled "Having estate planning documents is very important."

The biggest issue faced by your family if you do not make an estate plan, is that your family will not decide who gets your property. Instead, the courts get to make that decision and they do so by following statutes that determine who gets everything.

The person who the courts decide gets everything, might not choose to follow any directions you have given to distribute that property to other people. In some cases, it might be impossible for them to follow your wishes, even if they wanted to, since they could face negative tax consequences.

If you can take the time to tell your family how you want your property divided up, then you can take the time to get a formal estate plan that will actually carry out your wishes.

Reference: Fontana Herald News (August 7, 2017) "Having estate planning documents is very important."