April 12, 2017October 25, 2023

The Core of Estate Planning

If you feel overwhelmed about planning your estate, it might be helpful to remember what is at the core of estate planning. It is a way to transfer assets.

Estate planning can be and do many different things. It can provide for the care of minor children. It can be a way to let people know that you love them. It can create a charitable legacy.

In fact, there are so many things estate planning can be and do that may people get overwhelmed thinking about all of them. As a result, they do not create estate plans.

At its core, however, estate planning is not that complicated. Estate planning can be as simple as transferring your assets after death.

As the Times Herald-Record explains in “Transferring assets upon death,” there are four main ways to do that, including:

Wills – In a will you state who should get your assets and appoint someone to be in charge of making sure that your wishes are carried out. Wills have to be approved by a probate court.
Joint Ownership – If you have assets in joint ownership with another person, then by law when you pass away the joint owner becomes the sole owner of the asset.
Beneficiary Designations – For life insurance policies, retirement accounts and savings accounts, you name a specific beneficiary to receive the assets after you pass away. A court does not need to approve the designation.
Trusts – With a trust, you state how your assets should be handled, appoint someone to handle them and name the people for whose benefit the assets will be handled.

How do you know which approach or approaches are best for your circumstances? Contact an experienced estate planning attorney.

Reference: Times Herald-Record (March 15, 2017) “Transferring assets upon death.”

April 7, 2017

The Aging Wealthy are Making Plans

Much of the world's wealth is in the hands of a relatively small number of super wealthy individuals. Many of them are now elderly and making plans about what will happen to their wealth, after they pass away.

Over the past few years, you may have heard reports about income and wealth inequality in the U.S. Economic data shows that the country's wealth is rapidly being concentrated into fewer and fewer hands, at the top of the socioeconomic scale.

As a result, many politicians like to talk about the top 1%. However, the data shows that wealth is even far more concentrated than that. Actually, it is in the top 0.1%.

This same phenomenon is not just occurring in the U.S. It is happening all over the world.

What will happen to all of that concentrated wealth when the current holders pass away, is a burning question as they continue to get older and older and eventually die?

This was the subject of a recent Private Wealth article "The World's Aging Rich Are Plotting What's Next."

The article provides many examples of what various wealthy people are planning. They naturally wish to keep their wealth away from waiting governments and do not want their families to fight over it.

This has led to various legal methods to avoid estate taxation and other problems.

Some are choosing to transfer the bulk of their assets to family members now. Others are planning to give a large portion of their wealth away to charities, so their families have nothing to fight over.

Since much of the world's wealth is in complicated trusts and other entities, it will be interesting to see how it all gets sorted out when the current holders continue to age and do pass away.

Reference: Private Wealth (March 3, 2017) "The World's Aging Rich Are Plotting What's Next."

April 4, 2017August 9, 2024

What Estate Planning Really Is

You can think about estate planning in many different ways. One of the simplest and best approaches is to think of estate planning as a way of telling your family that you love them.

Estate planning is often thought of in cold or detached legal and financial terms. It is a way to decide who will get your assets, after you pass away and what the best legal instruments are for distributing those assets.

Viewed in that way, estate planning might not seem very important to many people, especially if they do not have many assets and do not particularly care about the legal aspects of transferring those assets after they pass away.

There is, however, another way to think about estate planning as Lifezette reports in “Estate Planning: A Love Note to Your Family.”

Estate planning is a way to let your family know that you love them.

As the article suggests, it is a love note to your family. You might not care too much about how your assets will be distributed when you are no longer around to worry about it, but it can make a big difference to your family.

Getting a proper estate plan, can spare your family the costs and legal headaches of having to go through the probate process. It can even stop them from fighting over who gets which assets.

When you think about estate planning in those terms, then it should be obvious that everyone should get an estate plan. If you love your family, it is one the best things that you can do for them.

Reference: Lifezette (March 7, 2017) “Estate Planning: A Love Note to Your Family.”

February 21, 2017

Have You Really Talked to Your Children About Your Finances?

For most estate plans to go well, it is important that parents talk to their adult children about the family finances. While many parents claim that they do, the children say that they do not.

Estate plans often have many complicated pieces, since they reflect the complicated nature of people's finances. Those who are not financial experts, often have problems dealing with the complexity of handling an estate, if they have not been told beforehand what they will be dealing with and how to handle it.

For this reason, estate planning attorneys normally advise their clients to have an in-depth conversation with their children about their finances. If the children are going to be called upon to act as a power of attorney in the event of incapacity or to administer any portion of the estate, then they need to know what to do before they need to do it.

Forbes reports that those conversations may not be happening nearly enough in "The Last Taboo: Your Parents Still Won't Talk About Their Money With You."

A total of 70% of parents report that they have had detailed conversations with their children. However, only 50% of their children report that those conversations have actually taken place.

What this suggests is that while parents might be giving what they think are detailed explanations about their finances, the children still have questions that should be answered.

It is important not to assume that your children know what they are supposed to do from a brief overview. Invite them to ask questions and answer any that they have.

Reference: Forbes (Jan. 31, 2017) "The Last Taboo: Your Parents Still Won't Talk About Their Money With You."

February 20, 2017February 15, 2024

Personal Items Cause Fights In Estates

Most of the estate disputes that get reported, involve large fortunes that are being fought over. In reality, most family estate fights involve much smaller things such as personal items.

You may not realize it, but many of the personal items you have around the house have a special meaning to your adult children. Some items might remind them of childhood memories. Some items might remind them of you. Other items they just might like for one reason or another.

While you are alive, these items are unlikely to cause any problems. However, after you pass away, they could very well cause problems for your estate.

If you have more than one child that wants a particular piece of personal property, there needs to be a way for them to decide who gets it, as Business Vancouver points out in “Wills: Leave’em laughing.”

There are several different things you can do to make sure that your children do not argue over your possessions. If you want a child to have something in particular, then you can give it to them before you pass away or you can make specific designations in your estate plan.

Another method is to direct that your children use a reverse draft method. One child picks an item. Then the next child goes and so on. When every child has picked something, then the order of choosing is reversed and they all pick again.

A list could also be presented to each child of all the important items and they can rank them all by preference. The estate executor can then use those rankings to guide the distribution of personal items.

The important thing is that you need to think about the potential problems in your estate plan and have a way for those problems to be resolved.

Reference: Business Vancouver (Jan. 31, 2017) “Wills: Leave’em laughing.”

February 16, 2017

Signing an Inheritance Away. It Happens.

It is every parent's worst fear. A child will agree to give away their inheritance for far less than it is worth for quick money.

Recently, MarketWatch published an advice column with the following question as its title: "My drug-addicted friend signed away his $800,000 inheritance to his brother — now he’s clean, can he get it back?"

The title is an almost complete description of what happened. A reader wrote in with a story about his friend who inherited $800,000 from his father's will. The friend was addicted to drugs and agreed to sign his rights to the inheritance away to his own brother for only $10,000.

Now, that the friend is sober, the reader wonders whether there is any way to get the inheritance back.

The column writer suggests that the friend hire an attorney and sue the brother for fraud based on the premise that he knowingly took advantage of someone who was mentally incapacitated. That might work in some cases.

But not so fast.

There are some states and courts that are not quick to undo agreements that drug addicts voluntarily enter into, especially if it cannot be proven they were high at the time of making the agreement.

This is the type of scenario about which many parents have nightmares, when it comes to their addicted children. Leaving the child an inheritance outright can quickly be lost.

Fortunately, there are ways to avoid the problem altogether without disinheriting the drug-addicted child. A trust can be used to protect the inheritance with a trustee who is granted the discretion to only distribute money when the child is able to handle it.

Reference: MarketWatch (Jan. 24, 2017) "My drug-addicted friend signed away his $800,000 inheritance to his brother — now he’s clean, can he get it back?"

February 2, 2017

George Michael’s Estate: Who Inherits?

Singer George Michael died suddenly on Christmas Day. He has no children of his own and it is believed that he made arrangements for his several godchildren to inherit vast sums from him.

George Michael died unexpectedly on Christmas Day. He was found dead from heart failure by his boyfriend.

Michael was known to have given generously to charities throughout his life, but he is believed to still have an estate worth at least £100 million (US$121.8 million).

The details of his estate plan are starting to leak out, according to the Daily Mail in "George Michael's £100M fortune 'will go to his Godchildren': Offspring of his celebrity friends could inherit tens of millions EACH after star died without heirs."

Michael did not have any children, but he was a godparent to some of his friends' children, including those of a former WHAM! bandmate and a former member of the Spice Girls. These godchildren will each inherit a large portion of his estate. He is also believed to have left provisions for his sister and his cousin's children, who are also his godchildren.

More details about George Michael's estate plan are likely to come out in the next few months, as the estate is settled by the courts in the U.K. If George Michael had lived in Maryland, his heirs would have to pay the Maryland inheritance tax. For more information about estate planning, contact Profit Law Firm.

Reference: Daily Mail (Dec. 27, 2016) "George Michael's £100M fortune 'will go to his Godchildren': Offspring of his celebrity friends could inherit tens of millions EACH after star died without heirs."

January 4, 2017May 12, 2022

When to Change Beneficiary Designations

Who you name as the beneficiaries of your retirement accounts and your life insurance policies, is an important part of modern estate planning. Knowing when to change them is vital.

Estate planning today is not just about going to an estate attorney to have a will or a trust drawn up. It also includes making plans for your own end-of-life care and deciding who should get your retirement accounts and life insurance policies, if something happens to you.

The beneficiaries of your accounts will get the assets by operation of law, regardless of what the will says. If you have done everything correctly, then you have factored those accounts into your overall estate plan with the assistance of your estate planning attorney. Sometimes you need to review and change those designations. Profit Law Firm can help you understand how each asset will pass to the next generation and ensure that your overall goals are met with careful oversight of your beneficiary designations and careful will drafting. Schedule a consultation today.

Recently, the Aiken Standard listed some appropriate times to do that in “On the Money: Don’t disinherit your loved ones,” including:

If you get divorced or remarried, then review your accounts to make sure you are not leaving things to an ex-spouse or that your new spouse is included.
If you get a new employer and roll over your old account, then make sure that the new account accurately reflects your wishes.
If the primary beneficiary on your accounts passes away, then you obviously need to make changes.
If the financial institutions you have the accounts with change ownership, review your beneficiary designations to make sure the new company has everything recorded properly.
If you have a new child or grandchild, consult your estate attorney about including them and whether they should be named as beneficiaries.
If a beneficiary becomes disabled, you should talk to an attorney about creating a special needs trust. Keeping them as a beneficiary could make them ineligible for some needed government benefits.

Reference: Aiken Standard (Dec. 10, 2016) “On the Money: Don’t disinherit your loved ones.”

January 3, 2017

Estate Planning Is Not as Hard as You Think

Many people put off estate planning because they mistakenly believe that it will be too difficult and time-consuming.

Younger people delay getting estate plans for all sorts of reasons. Some think that they are too young for it. Some think that they do not have enough assets to bother with it. Others think that it will be too difficult or take too long.

A columnist for The Gleaner put it off because she and her husband could not agree about who would care for their children. She wrote about their experience in "HARDY: No reason to delay estate planning."

The article is instructive and enlightening. The writer details how once she and her husband did come to an agreement about their children, the process of getting an estate plan was not as difficult as they thought.

This might be because they took the critical step of going to an estate planning attorney instead of trying to do things for themselves.

The attorney provided the couple with a questionnaire that allowed them to think about things that they had not even considered and make their own decisions about those things. If the couple had tried to create their own estate plans, they likely would have been incomplete because of the things they did not know.

The important lesson to learn from the column is that there really is no reason to delay getting an estate plan. If you go to an estate attorney, the process will be simple and you will get a complete plan.

Reference: The Gleaner (Dec. 10, 2016) "HARDY: No reason to delay estate planning."

December 22, 2016

The Best Reason to Get an Estate Plan

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."

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Category: Estate Plans