When it comes to our kids, we know that there’s nothing we wouldn’t do to ensure that they’re safe and happy. Legal mechanisms like estate planning allow you to give your kids the surety that, in the event something happens to you, they will be protected. Within the estate planning toolbox, there are two tools that will protect your kids: the trust and the guardianship papers. Both help you plan for any possible eventuality, and both will give you and your whole family peace of mind.
In addition to a trust, choosing the best guardian for your kids is a must-do for anyone with minor children who is looking into estate planning. This involves careful thought and preparation, and we will give you some advice on choosing the best guardian for your kids. But first, let’s see how we define a trust.
What is a Trust?
When you hear the phrase “Trust Fund Kid,” you might think of negative connotations, like the spoiled rich kids that are classic movie villain tropes. However, trusts aren’t just for people with tons of money. A trust is a three-party relationship that is fiduciary in nature. You, the trustor/donor, give nominal title to a trustee, who then holds title until you tell them to grant it to your beneficiary (in this case, your kids). This trust can hold many different things, including cash, stocks, bonds, or even property. The beneficiary can access the trust when they reach 18 (or 21, depending on your instructions).
By forming a trust for your kid, you ensure that you will be able to financially support them in at least some respect once they reach adulthood. The trust grants financial security, and you don’t need to put millions in there to help your kids.
Guardianship for Your Kids
In addition to the financial security a trust brings, guardianship papers are a must-have for anyone who is estate planning with minor children. Even if your children are 17 and have almost reached adulthood, it can’t hurt to include guardianship, as you never know what can happen. Once you’ve made your selection, talk to your proposed guardian. If they agree, make sure to officialize it in your estate plan.
Here are some considerations when choosing the best guardian for your kids.
Consider Overall Values
We all have an idea of how we want to raise our kids and the values we want to instill in them. It doesn’t matter where these values come from—religion, family tradition, etc.—what matters is that they’re important to you. Draw up a list of general values you want a guardian to have. This will get your list going in the right direction.
Think About Day-to-Day Life
In sum, it’s really about what your kids will be doing each day of their life with their guardian. School, homework, work, planning for college—all these activities matter in the short- and long-term. When you’re considering a guardian, think about how your child’s day will go with them and whether it will be a stable environment for them to come home to each day.
Talk to Your Prospective Guardians
You may have the perfect person in mind, but don’t forget: you need to ask their permission first. Talk to your guardian about your proposed role for them. Make sure they’re on the same page in terms of child-raising.
While no one ever wants to think about negative potential life events, it never hurts to be prepared. In addition to a trust, choosing guardianship for your minor children in the event that something happens is the best way to ensure that, even in the worst case scenario, your kids will be protected and have the best chance possible at a great life.
It’s not uncommon to think of a last will and testament as being something that belongs to an elderly person who is in their last years. But actually, there is no specification saying you have to be old or dying to write a will and, in fact, you should consider writing one once you’ve reached adulthood. Anyone older than eighteen can make a will. (Someone who is younger than eighteen can’t form a will that is considered valid unless they meet certain circumstances, such as marriage and court approval).
When making a will, it isn’t about age, it’s about capacity. So, when asking, “How young do you have to be to consider a will?” the answer is eighteen or over, as long as you’re able to understand and approve what you’re doing.
Regarding someone’s mental state, substantive law has a few requirements for those seeking to make a will. An individual who is eighteen or older needs to have what’s called “testamentary capacity.” Testamentary capacity means that the person is of sound (or disposing) mind, memory, and understanding at the time that he or she makes the will.
Someone has testamentary capacity if they (1) understand what a will is, (2) understand, in at least general terms, the type of property and the amount of property that they are disposing, and (3) have the capacity to consider moral claims when deciding who they want to leave their property to.
Lastly, the will’s maker needs to know the contents of their will and approve of them. If the age and capacity requirement is met, you can make a valid will, whether you’re young and off to college or elderly and nearing the end of your life.
Why Young People Need Wills
At eighteen, you might not have much of an estate. However, “not much of an estate” is still an estate, even if there are just a few things in it. You likely have at least some things in your name, whether it’s your car, laptop, clothing, and other personal effects. If something were to happen to you, however unlikely that might seem, you would want to make sure your parents knew what to do with your things. Plus, making your will when you’re young ensures that you’re at your peak capacity to understand. You don’t want to be old and sick before trying to tackle this process.
What a Will Can Include
A will includes instructions for where you want your assets to go after you pass away. An estate plan in general, however, can include much more than that, such as a healthcare directive and power of attorney, both of which are very important. These documents provide instructions on what to do with your finances and health decisions if you’re too sick to make them yourself. Designating your parent (or whoever) as your power of attorney will ensure that your things are taken care of until you’re back on your feet. When you’re creating your will, consider creating those two documents as well. An estate planner will help you through the process.
It might be tempting to go online to a legal document site and create these yourself, but that almost always leads to things being forgotten or left out or minor technicalities arising that could wind up costing your family a lot in court fees to solve. It’s best to consult with a lawyer to make sure it’s done right the first time.
Everyone young thinks they’re going to live forever, and, in almost all cases, they usually have a long time before they’re going to even need to use their estate plan. However, that doesn’t mean that they should neglect to make a will. Even something simple will offer protection in the worst case scenario, and estate planning in general provides protection in a variety of circumstances.
The rules of tennis can be a little confusing, but you don’t need to understand them in detail in order to have fun watching the U.S. Open Tournament. It’s an exciting time to see the country’s favorite players and ambitious newcomers battle it out on the court. One tennis rule is that “love” equals nothing. Interestingly, the word love as it’s used in tennis comes from the French l’oeuf, which means “egg.” The shape of an egg is the shape of zero, and the concept went from there and became love.
However, in the rest of the world, love doesn’t mean “egg,” and when you love someone, that takes on a lot of meaning. You need to protect the ones you love, both now and in the future, and estate planning can help you do just that. Here’s how:
Trust-Based Estate Plans
In general, estate plans are plans for asset protection and distribution, as well as debt repayment, in the future after you pass away. These plans can also include power of attorney designation and health care surrogate appointment in the event you become incapacitated, but when it comes to your family, the word you really need to know is “trust-based estate plan.”
A trust-based estate plan and a will-based estate plan are two very different things. With a will-based plan, you provide instructions to probate court (the court in charge of managing and enforcing the will) as to how to distribute assets. The downside to this is that your family has to go through the long, tumultuous process of probate court.
A trust-based estate plan, by contrast, keeps you out of probate court. A trust-based estate plan allows your beneficiaries to get your assets directly via a revocable trust. The trust has title of your assets, allowing them to go to your designated relatives when you die without going through a middleman.
Avoiding Probate Court: A Very Good Gift
The probate process can take a while to accomplish, sometimes even more than a year. It’s expensive and time-consuming, and there is a lot of room for bickering and conflict with probate court. Staying away from this process ensures that your family isn’t left waiting to get your assets. They can benefit from them immediately, without going through the negative experience of probate court.
Updating Your Plan
When you choose a trust-based estate plan, you still need to make sure that you update and assess the plan every three to five years. Even if you think nothing’s changed in your family, it doesn’t hurt to take a look. If your family does go through life changes, however, you should make sure your plan reflects that (i.e. a new marriage, new children, divorce, death, etc.). Updating and re-assessing your estate plan ensures that your plan is current and benefits the people you want it to benefit.
When you love people, that love means everything to them. A way to show it is through protection in the courts. While not as flashy as roses and lavish gifts, estate planning is a diligent way to protect family members and give them the support they need in the future through a trust-based estate plan.
August 16th is the kickoff for the “Real Men Wear Pink” campaign, which raises awareness about breast cancer. Male community leaders and figures from around the country wear pink to support survivors of breast cancer and raise funds to continue research into finding a cure for the disease. Men pledge to wear pink all through the month of October, which is Breast Cancer Awareness Month. We’re happy to announce that Michael Wild will be one of the men featured at the August 16th kickoff! Here’s a little more about Real Men Wear Pink and the cause it supports.
More About This Important Cause
Real Men Wear Pink gets men involved in what has been predominantly, and inaccurately, thought of as a woman’s issue. In reality, families of breast cancer sufferers are affected as well (not to mention that men themselves, though a tiny percentage, can actually get breast cancer too). Participants in Real Men Wear Pink make several commitments to help win the fight against breast cancer. These commitments include wearing pink all during the month of October, using social media to raise awareness about breast cancer and the need to continue to fund research, and raising at least $2,500 to donate to the American Cancer Society, which sponsors Real Men Wear Pink.
Pink has always been thought to be a feminine color, but Real Men Wear Pink has shown that it is not. Pink became the color for breast cancer awareness after participants in the Komen New York City Race for the Cure® received pink ribbons in 1991. Since then, the color has stuck, and Real Men Wear Pink demonstrates support for breast cancer survivors and their families by showing that wearing pink can be “a guy thing” too.
Seeing the Early Signs
There is a lot of information available on the American Cancer Society website (among many others) about breast cancer, but here are some important facts and statistics, curated from the nonprofit BreastCancer.org, to know about this disease:
First, invasive breast cancer will develop in one in eight women (that’s 12.4%) over the course of her lifetime. In 2018, this number will reach 266,120 new cases. The number of new cases of invasive breast cancer has gone up and down over the years, but, since 2000, the overarching trend has been an increase in cases.
Second, this form of cancer kills more women than any other type of cancer, with African American women under 45 being at the highest risk of mortality. Right now, over three million women in America possess at least some family history of breast cancer. Family history, lastly, is a major indicator of breast cancer. If you have a close relative that has the disease, your chances of contracting it are very high when compared with someone with no family history.
Though scary, these statistics and others form an important picture to understanding the seriousness and severity of breast cancer across the country, highlighting why campaigns like Real Men Wear Pink are so important.
How Can Wild Felice & Partners Help You and Your Family?
Estate planning can help when dealing with an illness and planning for the future. Schedule an appointment to form an estate plan that will benefit you and your family.
Breast cancer affects thousands upon thousands of women. The Real Men Wear Pink campaign has managed to help many people, both on a personal level and a societal level, by raising awareness and money to battle breast cancer. There will be a cure one day, and the more attention and funding we can raise for this fight brings us that much closer to helping find a cure. In the meantime, aiding survivors and their families is something we can do right now, today.
When it comes to estate planning, you want to make sure that you do not have a hole in one. Estate plans cover a wide range of topics, and asset protection is one of the most important. It’s vital that you go over and check your estate plan for things you may have missed or things you need to add. Estate plans should be assessed every three to five years. You can assess them before that, of course, if there are major changes in your life.
Here are some reasons and factors that make reassessment of your estate plan a valuable tool. If these have occurred in your life, you should definitely update your estate plan. But, even if they have not, you should still do a routine assessment every three to five years.
Deaths in the Family
Unfortunately, it happens. If there is a death in the family, you will need to check and see whether that affects your estate plan. If the person who has passed on is, for instance, someone you intended to leave guardianship to or grant some other important position, you want to get that redone immediately so that there are no holes in the estate plan.
You may feel a temptation to put off making the assessment appointment, but, if something bad happens and you haven’t updated your plan, your family can really find themselves in a tough spot.
New marriages mean new relatives! If you want to include your in-laws in your estate plan, make sure that you update the plan to reflect the new people coming into the family. Or perhaps a marriage has, sadly, ended, and you want to take someone out of your plans. These are grounds for assessment.
On a related note, childcare issues are considerations for additions. If you yourself are getting married and planning on having children (or perhaps you’re combining families), you should have guardianship plans in place in the event that something happens to you or your spouse while the children are still minors.
There is a very valuable 529 plan offered by the IRS that allows you to put aside money to pay for a student’s college tuition. The money will be subject to certain tax breaks and exemptions. Generally, these plans are able to be used interstate, for public or private school (but your estate planner will, of course, check to make sure that your state’s law covers this). If you have kids in your family who are set on college, the 529 college savings program can be an important addition to your estate plan.
Changes in the Law
Estate law is complex, and it does change. For example, there are recent alterations to the law in the form of the gift tax and the estate tax, where the exemption amount has increased. Now, $22.4 million in income can be excluded by a couple (with over $11 million each available for exclusion by a single person). Tax-exempt gifts at or over this amount should be given now, in case the law sunsets. This is an example of a change in the law that can alter the way your estate plan is formulated.
Make sure there isn’t a hole in one of your asset protection plans by updating and checking them at regular intervals. This way, no one will get left out of your estate plan and things will be smooth sailing—i.e. there will be no need for probate court. Schedule an appointment today if you find that you’re in need of making any changes.
Summer means extra time to check up on things you may have pushed to the side during the year. For business owners, this summer period is especially important, as it gives the time to review your asset protection or update partnership agreements.
Estate planning is particularly vital for business owners, as their business is part of the legacy that they’ll continue to leave behind after their passing. Here are some ways that business owners can update their estate plans this summer.
Review Asset Protection
An example of such protection is a succession plan. This is important for any business form, whether a partnership, sole proprietorship, or family-owned business. If you don’t formulate a plan for when you pass on, your business will be without direction, and that can seriously harm your company, if not sink it entirely.
For sole proprietors whose business and personal assets are not separated, you especially need a solid plan of action. An example would be using your personal assets to cover business debts and settle them after you die. You can also pick your successor or, if you plan to sell when you die, find ways to make the sale easy and painless for your heirs.
Family-run businesses might do things differently, choosing to pick heirs based on their level of contribution to the company. You might want those who are most involved to take over the business and buy out the less-involved stockholders. Losing a family member is difficult enough; you want to make sure that the direction you’re giving your family makes this experience less painful.
Update Partnership Agreements
Updating partnership agreements is another area in which business owners (partnerships) can benefit from thorough estate planning. An example of a common tool that partnership agreements use in the event of a death of one of the partners is a buy-sell agreement.
In a buy-sell agreement, the partners establish a plan for the business in the event of the death/incapacitation of one of the owners. In this document, you can tell your partners whether or not you want them to buy out the share you own, block certain people from becoming involved in the business, or sell your share. This requires a lot of communication, but it is worth it to ensure the health of your business.
The “death tax” is just as ominous as it sounds. It is a tax on the value of your business that is due in less than a year of your passing. To prevent your death from turning your business into a must-sell, there are two different types of tax breaks, found in sections 303 and 6166 of the IRS code, which have to do with stock value and deferral. You can use estate planning to take advantage of these sections and save your business’s value after you die.
Business owners, whether they’re proprietors of small, mid-size, or large businesses, all need to stay up on their estate plans, as this diligence will ensure the future growth of their businesses even after they have passed on. Use the extra hours this summer to review your plan and make updates if needed.
There’s nothing more thrilling than a great international vacation! As you make your checklist of things to do before you travel, don’t forget to put “Update estate plan” on the to-do list.
When you’re about to travel internationally, you want to make sure that you update not just your passport, but your estate plan as well. Every three to five years, you should review your documents. There might be papers in your estate plan that you drafted a decade ago; it would definitely be a good idea to look over those, as it’s very likely something in your life has changed in the past ten years.
Why should I update my estate plan?
International travel in particular Is a significant catalyst for updating your estate plan because it has a lot of unknown variables. You’re overseas, and if something happens, the situation will not be handled in the same way it is here; your doctors aren’t overseas, and your entire family and lawyer probably aren’t traveling with you. Updating your estate plan is important in case something happens. If you become sick, incapacitated, or even pass away while on the other side of the world, documents in your estate plan will become tools to guide others on how to manage the situation and get your affairs in order.
Documents to Review
Not only should you review these documents, you should also update them if necessary. This is by no means an exhaustive list, and you might find that there are more things you need in your plan to ensure your total preparedness for travel.
That said, here are the major ones to be on the lookout for:
- Power of attorney. A power of attorney is a trusted individual that you select to make healthcare and/or financial decisions for you in the event that you become too sick or incapacitated to do so. While you may have chosen your power of attorney with domestic ailments in mind, you should also add a stipulation for that person (or perhaps someone else) to be in charge of your healthcare and finances should you be incapacitated while overseas.
- Living will. Your living will is a healthcare directive that tells doctors and hospitals what to do with you when you are receiving treatment yet are unable to communicate your health wishes. This state usually happens when you’re too sick to tell the doctors what you want. Update your living will to include a provision that makes similar arrangements for when you’re hospitalized overseas, as well as arrangements to transfer you to your preferred hospital if possible.
- Guardianship. Worst case scenario, you pass away while overseas. If you have young children, you don’t want there to be a delay in finding the proper guardian for them. Choose your minor children’s guardians beforehand. That way, if something happens, they’ll be in the best hands possible.
Have fun on your trip! You’ll have greater peace of mind while traveling just knowing that, in the event something happens, you’ll be in good hands. Reviewing and updating your estate plan is not a cumbersome process at all, and it will be time well spent.
Did you know? July is the Unlucky Month for Weddings. If you’re beyond superstition and decide to defeat the odds, make sure at least that you have a prenuptial agreement in place and all of your affairs in order. After all, lucky or unlucky, we do not need to bring up the stats on divorce rate, do we?? Take our advice and consider setting up a prenup, cause it’s better to live in “richer” than in “poorer” once the wedding bells stop ringing.
A prenuptial agreement isn’t pessimism, so much as it is smart business planning. Prenuptial agreements are contracts entered into prior to the marriage that discuss what will happen to each party’s finances in the event the marriage fails. Broaching the subject of a prenup can be tricky, as your future spouse might think you’re betting on the relationship to fail, but it is an important conversation to have in order to protect yourself and your assets. It’s about smart business planning and minimizing risk.
What is a Prenup?
Prenuptial (prenup) agreements are often called “premarital agreements.” This type of private ordering functions as a contract. The contract is entered into by people prior to their marriage or civil union. Prenups can cover a lot of different areas, but the idea is pretty much consistent: protecting your assets in the event of a divorce. Categories of prenups have to do with property division, spousal support, and asset forfeiture. There are also guardianship conditions that can be included, though child support and custody is not modifiable via a prenup. Only a court can determine and modify child support and custody. The reason for this is that what you put in the prenup might not be in the best interests of the child. The best interests of the child takes precedence over whatever private order you might seek.
Five things are required for a prenup to be valid. First, the prenup has to be in writing, Second, the prenup must be voluntarily executed by the parties. Third, at the time of formation, all information has to be fully and fairly disclosed. Fourth, the prenup can’t be unconscionable (which means so unfair that it “shocks the conscience” of the average observer). Lastly, it needs to be notarized the same way that a deed would be. If you meet all of these conditions, you have got yourself a prenup.
How do I get a Prenup?
Prenups are a common asset protection tool of estate planning. Consult an estate planner to see what he or she has to say about organizing the prenup. The planner will ensure that the above elements are met and your prenup is valid. But, remember, a prenup has to be voluntary, so your future spouse must be on board with the idea. Otherwise, the prenup won’t be valid.
Benefits of a Prenup
Your personal and business assets will be protected in the event that your marriage is unsuccessful. You can guard them against forfeiture and division, and you won’t lose what you’ve worked hard for because of your divorce. Should the marriage go south, your business will survive and you won’t get hit hard financially.
Hopefully, this article has encouraged you to have the conversation about prenups. These agreements aren’t a reflection of the strength of your relationship; they’re a reflection of how careful you are about finances, and fiscal responsibility is always a good characteristic to have in a partner. Consult an estate planner to create or update your prenuptial agreement today.
It’s almost the Fourth of July! Fireworks, steamy barbecues, pool parties and tons of fun are on the table! But, before you start lighting things on fire — especially in the evening, after having treated yourself the entire day to way too many mimosas, margaritas, or beers … — make sure your assets are protected. And we don’t just mean limbs, noses and other precious bodily parts. We mean estate planning. Summer in general is a good time to take care of stuff you might have been too busy to look at during the rest of the year, and reviewing and updating your documents to ensure your assets are protected is never a bad idea.
Here are some major estate planning tools that you can use to keep your assets safe:
A living trust is a three-party fiduciary relationship. You are the donor. The person you’re ultimately giving your assets to is the beneficiary, and the third party is known as a trustee. You give nominal title of the assets to your trustee, who then confers the property to the beneficiary at a set time. The living trust is effective immediately and it can be revocable or irrevocable, depending on what you want.
The reason a living trust is such a powerful way to protect your assets is because it allows you to avoid probate court. Your assets will go directly to the desired recipient. They won’t be taken through court and possibly diverted to pay off debts.
Power of Attorney
The power of attorney is a person you choose. This trusted individual will take care of your finances in the event that you become too sick or incapacitated to take care of them yourself. The POA handles important decisions for you regarding your assets, and he or she handles them during a very vulnerable time in your life. For that reason, you should give a lot of thought to the person you choose, as they will be protecting your assets when you aren’t able to do so yourself.
The living will is similar to a POA in that it takes place when you’re too sick or incapacitated to make your own decisions. The living will is a directive that tells hospitals and doctors what you want done in terms of medical decisions. When you can’t take charge of your own healthcare in the moment, there will still be a way for you to have a say in what happens to you.
Estate planning is particularly important for business owners. Business owners should have a succession plan in their estate planning toolkit or a directive on the sale of the business after they pass away. Updating partnership agreements and reviewing documents pertaining to the life of the business after you, the owner, dies is vital to ensuring the growth of the business and financial wellbeing of your family.
If something happens to you and you have minor children, who will be their guardian? Guardianship is an important tool to have in your estate plan because it gives you peace of mind that your children will be taken care of even if you’re not around. Having guardianship documents is always a good idea for anyone with minor children.
These are just some of the many ways you can protect your assets. So, before you start lighting fireworks and firing up the grill, make sure that you have taken care of your estate planning needs. After that, Happy Fourth!
Independence Day is coming up soon, and you’re probably already thinking of ways in which you can celebrate one of America’s most fun holidays. In between all the red, white, and blue, remember that the idea of independence can stretch across all kinds of areas, including those that you hold most dear. Have you thought about your future lately? And not just what you’re going to do tomorrow, or even weeks from now, but the future that will go on after you pass away.
Estate planning helps you prepare for such a future. It ensures that you’re able to spare your family the tedium and expensiveness of probate court via tools such as living trusts, gifts, and documents that will help keep your estate out of the legal system. In this article, we’ll talk about why your estate needs its “independence” from probate court.
What is probate court?
After you die, the world is left with your estate, which includes, among many things, your assets and debts. Your asset need to be distributed, as do your debts. Probate court is a special area of the legal system in which a judge uses your assets to pay off your debts, and then assigns whatever is left to your relatives. It’s basically the management and distribution of your estate using the legal process. Someone in your family is assigned the position of executor, and it is his or her job to oversee the winding down of the estate.
The Costs of Probate Court
Probate court can take at least a year, and there’s absolutely no guarantee that you’ll be able to have your assets distributed the way you want. There’s also no guarantee that your debts will be paid off in a manner you find appropriate for your family’s financial situation. The judge’s first goal is to get the creditors and IRS paid. Your loved ones come second to debtors and tax collectors.
While your estate is tied up (the more complicated the estate, the longer it’ll take), your family won’t have access to your assets. If they need money to pay bills, they are out of luck for the duration of the court process. Probate court requires a judge’s approval for basically every little thing. If your family goes through probate, a judge will run interference throughout the whole process, which will make the whole estate windup very protracted.
There’s also the expense of a legal proceeding. Filing fees can be several hundred dollars. While these fees come out of the assets of your estate, that’s still giving money to the courts that could have gone to something your family really needed.
Lastly, probate is not a private process. Probate court records are a public matter, and information about your liabilities, assets, representatives, and beneficiaries are all out there for the public to see. If someone wants to know something about you, they can read the probate file easily to find out, whether they do it by asking a county clerk (who is unlikely to care why the person wants to read your file) or by going online. Avoiding probate means that your family gets privacy.
Estate planning tools are there to help your family avoid the tedium, expense, and lack of privacy that comes with probate court. There are legal mechanisms that can give your family immediate access to your assets without requiring them to pass through court. Consult a planner today to make sure you’re getting your own “Independence Day” from costly and time-consuming legal processes.