July 17, 2017October 2, 2024

Fiduciary Rule Confusion

The new fiduciary rule for financial advisers has caused a lot of confusion about what is and is not allowed with retirement accounts.

On June 9, a controversial new Department of Labor rule went into effect. The rule seems simple enough. Financial advisors who give investment advice to consumers about their retirement accounts, must act as fiduciaries of those consumers.

At least for attorneys, that is a very simple idea to understand.

Nevertheless, for consumers and their advisors the new rule has caused a lot of confusion, as the Washington Post details in “A new conflict-of-interest rule for retirement savers is causing a lot of confusion.”

The easiest way to understand what the new rule means, is that advisors have to act in the best interests of the people they are advising. Investment advice must be based on the best thing for the saver, not the advisor.

Therefore, if an advisor would earn a higher fee from suggesting one investment rather than another, he, or she cannot advise the saver on that basis. If the investment that pays the least to the advisor is better for the consumer, then that is the investment that must be recommended.

Many advisors are taking advantage of the new rule to make changes to how they manage retirement accounts.

The confusion surrounding the rule has given them the opportunity to make changes customers may not like and place the blame for them on the new rule.

If you are not sure if a change your advisor is making is really required by the new rule or if you should look for a different advisor, ask an estate planning attorney.

Reference: Washington Post (June 19, 2017) “A new conflict-of-interest rule for retirement savers is causing a lot of confusion.”

June 27, 2017February 23, 2026

Protect Your Assets with Estate Planning

There is possibly no greater blow to a person, than losing all of their assets to creditors. It can happen to anyone, but you can protect against it by utilizing estate planning tools that provide asset protection planning for business owners and professionals.

You have probably noticed at some point or another, that the U.S. is a very lawsuit happy country, much more so than most European countries.

The reasons for this have a lot to do with the way that our court system is set up. Anyone can file a lawsuit for almost anything. There is very little to deter someone from doing so, in most cases.

Even if the plaintiff loses, he does not have to pay the defendant’s legal bills, which can be quite high. Consequently, no matter how wealthy a person is, they can be sued and potentially lose everything if the court system rules against them, rightly or wrongly.

Therefore, it is extremely important for the wealthy to protect their assets from potential creditors, as the Wills, Trusts & Estates Prof Blog discussed in “Asset Protection Measures.”

The good news is that protecting assets from potential creditors is not an inherently difficult task.

Estate planning attorneys have many ways to assist clients in doing that.

A trust is typically the best option for doing this. However, there are other ways to protect assets, including utilizing retirement accounts and college savings plans.

As a last resort, insurance can be purchased to protect against creditors.

You should protect your assets, and you should visit with an estate planning attorney to determine the best way to do so.

Reference: Wills, Trusts & Estates Prof Blog (May 31, 2017) “Asset Protection Measures.”

April 13, 2017February 23, 2026

Tennessee’s Cowan Rule

In most states, to completely disinherit a child in a will, parents have to mention the child and specifically disinherit him or her. Otherwise, it is presumed that the child was left out by mistake. Tennessee has an exception to the rule. Likewise, in Maryland, a parent must explicitly state an intent to disinherit a child to do so and should proceed with the advice of a Maryland estate planning attorney.

Don Brock, the late CEO of Astec Industries, wrote many wills over the years. He executed new wills in 1994, 1998, 2006, 2012 and 2013. His first three wills all did different things with regard to his five adopted children.

They were given various amounts of money or cut out from receiving anything in the different wills. The last two wills did not mention the adopted children at all. They claim that was done by their stepmother, in order to preserve the assets of Astec Industries for herself.

The children filed a lawsuit against the estate, but lost in the lower courts. The Supreme Court of Tennessee has now agreed to hear their case, according to the Times Free Press in “Tennessee Supreme Court agrees to hear J. Don Brock estate challenge.”

The main issue in this case is a 110-year-old decision by the Supreme Court of Tennessee that created what is known as the Cowan Rule. It limits the ability of potential heirs to challenge a will, if they were not mentioned in the previous will.

The adopted children lost in the lower courts because they were not mentioned in the 2012 will. The rule makes some sense.

Why?

Merely having the 2013 will ruled invalid would not create an inheritance for the children, since it would just validate the 2012 will, unless it is also successfully challenged.

However, this is not how other states handle disinherited children.

In other states, it is presumed that if a child is not mentioned in a will at all, it was a mistake and the child can challenge the estate, regardless of what an older will might state. In Maryland and DC, the will should explicitly disinherit. Contact a Maryland estate planning attorney or DC estate planning attorney in order to successfully disinherit a child.

Reference: Times Free Press (March 21, 2017) “Tennessee Supreme Court agrees to hear J. Don Brock estate challenge.”

March 29, 2017November 29, 2022

Millennials Also Need Estate Plans

Many articles are written about what the Millennial generation wants and needs. Not enough articles are written about their need for estate plans.

Whatever field you are in, you have undoubtedly heard a lot of talk about how it relates to the Millennial generation. No one hears about it more than Millennials themselves. They like to discuss what their generation needs and their elders like to tell them about what they think they need.

With all of the talk about how Millennials live, behave and even vote, there is not much room left for talk about what will happen if they pass away.

It might seem premature to have those discussions, because Millennials are young and expect to live for a long time. However, many of them will pass away long before they think they will.

That means they need to think about their mortality and get estate plans established, as the Christian Science Monitor points out in “Millennials, don’t forget estate planning.”

One of the most important things estate planning can do for Millennials is to get them to think about what happens to their belongings and their children after they pass away. Estate planning focuses the mind on how the decisions we make, can have a long-term impact on our loved ones.

If done properly, estate planning also gets young people to think about their need to save money for retirement, emergencies and the possibility they might pass away while they have minor children.

If you are a Millennial, then seek out an estate planning attorney.

You should go ahead and get your first estate plan, just in case something does happen. That will get you started on making important plans, which is a good habit to get into.

Reference: Christian Science Monitor (March 7, 2017) “Millennials, don’t forget estate planning.”

March 28, 2017May 15, 2022

Hire the Right Estate Planning Attorney

Most attorneys are specialists in their particular practice areas. For your estate planning, you should hire an attorney who is a specialist in estate planning.

Human beings can only become truly knowledgeable in a limited number of areas. We cannot all be experts on everything. This is true even within disciplines.

For example, if you wanted to learn something about the history of 16th century Britain, you would be unlikely to learn very much by asking a historian who specializes in the Roman Empire. You would want to ask a historian who specializes in English history. Even better would be asking someone who only studies 16th century Britain.

A similar need for specialization is even more obvious, when you think about your health.

If you need heart surgery, you would not seek the services of an ear, nose and throat specialist. You would not even want a neurosurgeon. You would want a cardiac surgeon.

The same thing is true with legal matters and estate planning, as the Norman Transcript points out in “The right attorney is needed for wills and estate planning.”

Estate planning is a complicated and specialized legal field.

Only attorneys who have dedicated their lives to studying the field can be guaranteed to give you the services that you need. You might know someone who is excellent in criminal law or who excels at writing contracts. While he or she might even be willing to help you with your estate planning, you would be better off going to an estate planning expert.

Many avoidable mistakes are made when people do not seek out the services of an estate planning attorney. Do not let those mistakes happen with your estate plan.

Reference: Norman Transcript (March 5, 2017) “The right attorney is needed for wills and estate planning.”

March 27, 2017October 2, 2024

IRS Audit Strategy Targets the Wealthy

In 2017 it is expected that the IRS will focus its auditing efforts on the wealthy, in order to get the most that they can out of their limited enforcement budget.

It used to be that the IRS was actually more likely to target middle class taxpayers for an audit than wealthy people. It is more difficult to audit the wealthy because they can afford to hire expert lawyers and accountants to fight the auditors.

However, years of cuts to the IRS budget have led to a change in tactics.

The IRS now prefers to target the wealthy for audits, so the agency gets the most bang for its buck. There is simply more money that the IRS can get by auditing the wealthy than by making sure middle class Americans have filed all of their taxes correctly.

This trend is expected to continue in 2017, according to Private Wealth in “This Year’s Audits Are Bad News For The Rich.”

The IRS is expected to go after common ways the wealthy often lower their tax bills and challenge them to prove that they have done everything correctly.

For example, a charitable deduction over a certain limit might trigger the IRS to send a letter demanding proof of the donation. Reporting that money was put into a 529 education savings plan over a certain amount, could also trigger an automatic letter as could a whole lot of other common practices.

It is important that wealthy people get together with their estate planning attorneys and accountants to make sure they have done everything correctly to lower their tax bills, if they want to avoid problems with the IRS.

Reference: Private Wealth (Feb. 28, 2017) “This Year’s Audits Are Bad News For The Rich.”

December 21, 2016November 26, 2024

What You Might Have Wrong About Wills and Trusts

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.”

December 16, 2016January 16, 2023

Why Homemade Wills Do Not Work

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.”

November 18, 2016December 4, 2023

You Are Not Done When You Get an Estate Plan

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.”

November 17, 2016February 23, 2026

Steps to Get an Estate Plan

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.”

Building Legacies that Last Estate Planning and Elder Law

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