October 21, 2016

Estate Planning Awareness Week

If you are one of the millions of Americans who do not have an estate plan, then the upcoming National Estate Planning Awareness Week is a great time for you to get one.

More than half of American adults do not have a current estate plan. The benefits of having a plan should be obvious.

With an estate plan you can say who gets your property after you pass away. An estate plan is the best way to make sure your family is taken care of after you pass away. An estate plan can help ensure your family is not unnecessarily burdened by estate taxes. And, an estate plan can make sure your end of life care is as you want it.

The Wills, Trusts & Estates Prof Blog reports that National Estate Planning Awareness Week is upon us. The article is appropriately titled "National Estate Planning Awareness Week: October 17-23."

If you are one of the people who does not have an estate plan, then why not get one during estate planning awareness week?

An even better idea would be not to wait for a special week.

Call an estate planning attorney in your area today and schedule an appointment. Getting an estate plan is not a difficult task for most people. You just need to tell the attorney what you want, listen to the options your attorney provides to accomplish your goals and let the attorney do the work of drafting the plan.

There is no reason to wait.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 3, 2016) "National Estate Planning Awareness Week: October 17-23."

October 19, 2016October 25, 2023

Post Death Termination Fees

Families and estate executors have enough to worry about after someone passes away. Should they also have to worry about termination fees for canceling a contract with a utility? One state says no.

If you have ever wanted to move to a different cell phone provider, you are likely to have come across a problem. As long as you signed a contract with your current provider, you either have to continue to pay the contract or pay a termination fee.

Depending on where you live, you might have come across other termination fees for things such as cable, electricity and garbage service. These fees are normally seen as reasonable as long as the person who signed the contract is alive. However, some people have discovered that some companies refuse to waive the fees even if the person who signed the contract has passed away.

These post-death termination fees can put a real strain on many small estates. If the deceased had few assets, even a fee of a couple of hundred dollars can be difficult for the estate to pay.

The state of New York has decided to address this problem and recently passed a law that prohibits utility companies from charging termination fees after the contract holder has passed away.

Fox 5 reported on this new law in “NY: Utilities can’t charge termination fees after death.”

This small law could provide big relief to families who are going through the difficult process of grieving for a deceased loved one. In turn, the new law should not create an undue burden on the companies. It remains to be seen if other states will follow suit.

Reference: Fox 5 (Sept. 28, 2016) “NY: Utilities can’t charge termination fees after death.”

October 18, 2016

Life Insurance Trusts

Life insurance is a great way to provide your family with liquid assets after you pass away, but if the policy benefits would put your estate over the estate tax exemption, then you might consider a trust.

When planning the estate of a family's primary breadwinner one of the biggest concerns is providing the necessary cash assets for the rest of the family to live on while everything else gets settled. This is especially the case if the estate is expected to go through probate or if most of the estate assets are difficult to sell quickly.

One of the best ways around this problem is through the use of life insurance. The policies pay out in cash almost immediately. However, as Forbes points out in "3 Considerations for an Irrevocable Life Insurance Trust" the solution is not always perfect.

One of the problems with life insurance policies is that the benefits can be counted for estate tax purposes. This is especially problematic if the benefits would put your estate over the exemption limit when it would not be otherwise.

One way to get the advantages of life insurance while avoiding the estate tax problem is to create an irrevocable life insurance trust. The trust becomes the owner and the beneficiary of the life insurance policy and keeps the benefits out of the estate tax calculations. However, if you transfer ownership of an existing life insurance policy, then you must live for three years to avoid having the IRS include the death benefit value in your estate anyway.

If you have questions about irrevocable life insurance trusts or other ways to provide liquid assets to your family after you pass away, then speak with an estate planning attorney about the options.

Reference: Forbes (Sept. 19, 2016) in "3 Considerations for an Irrevocable Life Insurance Trust."

October 17, 2016

New Estate Tax Case

In a case of first impression the tax court has broadened when an estate can claim a theft loss.

If the property of an estate is stolen, then the estate can report it as a “theft loss” and not pay estate taxes on the value of the asset. That is not a controversial issue. However, a recent case required the tax court to determine what it really means for property to be stolen from the estate.

In that particular case the deceased owned 99% of the shares in an LLC. All of the assets in that LLC were stolen through a Ponzi scheme. The estate sought to claim this as a theft loss, which the IRS disallowed on the grounds that it was the LLC's loss and not the estate's.

As Forbes reports in "Tax Court Allows Estate a Theft Loss Deduction for Property Held by LLC," the tax court disagreed with the IRS.

The court reasoned that since the Ponzi scheme reduced the value of the LLC to nothing, that it was a loss to the estate. It ruled that the relevant law just requires that there be a sufficient nexus between the estate's loss and the theft.

In this case since the deceased owned 99% of the LLC, it was appropriate to include the loss in the estate.

This was a case of “first impression” and it is unclear how the ruling will apply in other cases. It is also not known if the ruling will be extended to other entities and not just LLCs.

If you have questions about allowable estate losses, consult with an estate attorney.

Reference: Forbes (Sept. 27, 2016) "Tax Court Allows Estate a Theft Loss Deduction for Property Held by LLC."

October 13, 2016August 15, 2022

Should Seniors Get Married?

Getting married always comes with challenges and finances that needs to be worked out. This is especially true for people in their retirement years.

When people fall in love and decide that they want to get married, they often do not think of all of the financial consequences of their decision to wed. In the popular imagination this is something that young couples do all the time. They rush into a marriage without having first considered all of the financial implications.

However, elder law experts point out that the tendency does not go away with age.

Senior citizens are just as likely to get married without thinking everything through. That can be a problem, because seniors have more they need to think about than younger people as the Hartford Courant reports in “Fit To Be Tied? Think Twice About Marriage In Your Golden Years.”

Senior citizens considering getting married need to think about how marriage will affect all of their other plans, including retirement and estate plans. For example, a retired person might think his well-crafted estate plan to leave his assets to his children is solid and that a new wife with assets of her own will not affect those plans. Under the law, in Maryland and DC, however, a spouse is given inheritance rights. Therefore a retired person should contact a Maryland estate plannning attorney to review options to protect his children and the new spouse. There are several trusts that protect a spouse during life, while leaving the underlying assets to children from a prior marriage. Call Profit Law Firm, for consultation to find an option that works for your family.

In reality, it is almost impossible to cut a spouse out of an estate plan entirely. Consequently, whether or not the couple intends it, the new spouse is likely to inherit something without very careful planning. An estate planning

That is not to say senior citizens should never get married. They just need to think about it and visit an elder law attorney familiar with estate planning to learn about all the implications and what can be done about them.

Reference: Hartford Courant (Sept. 24, 2016) “Fit To Be Tied? Think Twice About Marriage In Your Golden Years.”

October 12, 2016October 25, 2023

When a Relative Is Missing

If a loved one has been missing for a long time, it is possible to have him or her declared deceased so that an estate can be administered.

You might have seen a television documentary or a movie about someone who disappears. With hundreds of channels in need of content the genre is a popular one. The stories normally focus on trying to piece together the clues about what might have happened to the person who vanished.

What they do not tend to describe in much detail is what happens to the person’s property. The property cannot exist in a legal limbo forever waiting for the owner to return as that might never happen.

A recent case out of Missouri helps to answer that question as ABC 17 News reports in “Family of missing man files petition to establish presumption of death.”

Charlie Bell disappeared in 2011. He was last seen riding his motorcycle. The police believe he was murdered based on witness testimony, but Bell’s body has never been found to confirm it.

His family is now asking a court to issue an order presuming that Bell passed away. If granted, the order would allow Bell’s estate to be administered.

Every state has a similar procedure in place for these types of cases.

When a person has been missing for a certain length of time, which varies from state to state, a court upon application can issue an order presuming death and allowing the administration of the estate.

Reference: ABC 17 News (Sept. 22, 2016) “Family of missing man files petition to establish presumption of death.”

October 11, 2016February 15, 2024

How to Get an Estate Plan

People seeking retirement advice often express concerns about needing to leave an inheritance for their loved ones. They should get an estate plan to do that.

Different professionals have different roles in your financial well-being. Accountants can assist you with your tax returns. Retirement planners can assist you with your investments. And, as Morningstar explains in “Get Your Estate Plan in Gear” estate planning attorneys can assist you with an estate plan.

The article discusses a couple looking for retirement advice. They wanted to make sure their daughter with special needs would be adequately provided for after they passed away.

The author suggested that they get an estate plan and gave some tips about how to do it, including:

Hire an attorney who specializes in estate planning. If you want to make sure that your loved ones are taken care of, then you do not want to create an estate plan on your own.
Take stock of all the assets you own so you know what needs to be distributed in your estate plan.
Figure out who you want to include in your estate plan as heirs, beneficiaries and in key roles, such as executors and trustees.
Try to learn what type of estate planning documents you might need. If you are not certain, then make sure that you let your attorney know that.
After you get an estate plan from the attorney, make sure you manage the physical documents themselves so they are in good shape and can be found if anything happens to you.
Keep your estate plan up to date and makes changes whenever your life circumstances change.

Reference: Morningstar (Sept. 23, 2016) “Get Your Estate Plan in Gear.”

October 10, 2016July 26, 2024

Locating Old Retirement Accounts

People with old pensions and retirement accounts often have difficulty locating them. It can be more difficult for estate administrators who need to locate the old accounts. Some help might be on the way.

When pension plans first became a popular benefit in the U.S. it was normal for people to stay employed by the same company throughout almost their entire working life. This held true when employers began switching from traditional pensions to 401(k) accounts. However, that is no longer the case for many working Americans.

People today change employers frequently.

That often means they have old retirement accounts setup at previous places of employment. If someone is not diligent in transferring those accounts when they change jobs, the old accounts can become forgotten or lost. That can make it difficult to later find those accounts when needed, such as when retiring or administering an estate.

This problem was discussed in a Wills, Trusts & Estates Prof Blog article titled “How to Find Your Lost 401(k).”

Currently the U.S. Pension Benefit Guaranty Corp. has a database of traditional pension plans that allows people to find any lost accounts. The agency would like to make that database easier to search and would like to expand it to include defined-contribution pensions and 401(k) accounts.

However, for now, inclusion of 401(k) accounts would be voluntary and there are other companies attempting to corner the market. A bill is in Congress that would make it mandatory to create a nationwide searchable database.

If you have old retirement accounts you cannot locate, you might want to contact your representative in Congress to urge passage of the bill.

Reference: Wills, Trusts & Estates Prof Blog (Sept. 20, 2016) “How to Find Your Lost 401(k).”

October 7, 2016

One Document Parents Must Have

Parents with small children want nothing more than to make sure their children are taken care of no matter what happens. A will is an essential document to do that.

There is something about bringing a new life into the world that changes most people. A new child causes most of us to change from being mostly concerned about our own well-being to being mostly concerned about the well-being of someone else.

This change has been much remarked on and studied. It appears to be almost universal for humans.

People who would not have previously sacrificed their own desires become willing to sacrifice for their children. However, what many young parents do not do is to make plans for how to take care of their children should something happen to the parents.

This is a mistake as Nerdwallet explains in "Protect Your Family by Writing a Will."

Parents who want to make sure their children are taken care of, if the parents pass away, need a will. Two important things can be done with a will. First, in a will parents can make sure their children are taken care of financially. Second, and most importantly, a will is the proper legal document for parents to express their wishes about who should act as guardians for their minor children.

The guardian is the person tasked with taking care of the day-to-day needs of the child. Parents who want to have a say in who rears their children need to have a will.

There are other estate planning documents that can be helpful for parents with young children. Accordingly, every parent needs a will and every parent should talk to an estate planning attorney about other important legal documents that might be useful given their own unique family circumstances.

Reference: Nerdwallet (Sept. 19, 2016) "Protect Your Family by Writing a Will."

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm