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."

February 1, 2017

Suing Yourself on Behalf of an Estate

Estate executors and personal representatives have a duty to the estate to pursue any causes of action that the estate might have, but what if that means they have to sue themselves? A case in Utah answers that question.

If a deceased person or the estate of that person has reasonable legal recourse against some other person or entity, then it is ordinarily the duty of the estate's representative to pursue that action in court. However, a recent case in Utah shows how that can lead to interesting results.

A man died in a one-vehicle accident when his common law wife was driving. The wife was the man's sole heir and was named the personal representative of his estate. In that capacity, on behalf of the estate, she filed a lawsuit against herself for wrongful death. Then, in her capacity as an individual and the defendant in the wrongful death case, she moved to dismiss the case on the grounds she could not sue herself.

The trial court dismissed the lawsuit.

The grounds?

Public policy prevents someone from suing themselves.

However, the Utah Supreme Court reversed that and allowed the wrongful death lawsuit to continue.

The Wills, Trusts & Estates Prof Blog discussed this case in "Case Summary on Suing Yourself as Personal Representative for Wrongful Death."

At first glance, this might seem ridiculous and pointless, since the woman is the sole heir. Even if the estate collects money from the lawsuit, it would just go to her. However, there are a couple of things that could be going on here.

Before any heirs receive their inheritances from the estate, any debts of the deceased have to be paid. It could be that the estate cannot cover the man's debts, unless judgment is obtained against the woman.

Another possibility is that the woman had insurance at the time of the accident. In that case, the insurance company might be required to indemnify her if she is held liable for wrongful death.

Thus, the estate would not really be collecting from her. It would be collecting from the insurance company.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 22, 2016) "Case Summary on Suing Yourself as Personal Representative for Wrongful Death"

January 6, 2017

Estate Planning With no Estate Tax

The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.

On January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. The party will quickly act on its long-stated goal of eliminating the federal estate tax.

If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.

At the very least, you still want to have a will as Forbes discusses in "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

The reasons include:

In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
A will is more efficient than allowing the courts to handle your affairs without your directions. Having a will is cheaper and faster than going to court. It also protects your estate by making sure that your property does not go to people you do not want to have it.

Reference: Forbes (Dec. 8, 2016) "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

January 5, 2017

What Estate Planning Is

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."

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 23, 2016

The Future of Charitable Giving

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."

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."

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 20, 2016September 15, 2022

Naming Your Trust the Beneficiary of Your IRA

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?”

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm