Start Anew, Update Your Estate Plan
There’s one New Year’s resolution you should definitely make and keep: updating your estate plan. With each year comes new considerations, and your estate plan should reflect these. You might be tempted to put off your estate plan updates, but you never know what will happen. It’s better to be safe than sorry, as the old saying goes.
Here are some examples of life changes and how you may want to update your estate plan to reflect them.
New Year, New Beneficiaries
Has there been a new baby in the family? Have you recently stumbled upon a new charity to which you want to donate? In order to do so, you will need to update your estate plan. This way, after you pass on, your assets will be transferred where you want them, including to the new beneficiary.
It’s important to get started on this now and updating your estate plan to reflect the new individual. People come and go in our lives, and you don’t want to miss your opportunity to include who you want in your postmortem plans.
If you have minor children, you’ve likely included a guardianship instrument in your estate plan that designates who will be the legal guardian of your kids in the event of something happening to you. If you’re still happy with the legal guardian you’ve chosen, that’s great. However, if you are not, you don’t want to wait to have that switched.
Things happen, and if you have reason to doubt the competency of the guardian you’ve chosen for your kids, you do not want to take a chance and put off updating it. Worst case scenario, something happens and your kids are left with someone who cannot take care of them. If you have doubts about your chosen guardian, make sure to update your estate plan.
Similarly, there may have been other developments in your family that warrant you rethinking your estate plan. Divorce is an example. You will want to make sure that the estate plan does not include your ex-spouse (or the ex-spouse of another family member), if you do not want it to. Also, if you feel like you want to disinherit someone, that is another reason to update your estate plan.
It is best to think of the estate plan as a living document. It reflects changes in your family; it is not stagnant, nor should it be treated as such. Families have their own feuds and fighting. An estate plan needs to keep up with the dynamics, if need be.
The Imminent Arrival of the 2018 Tax Code
The 2018 tax code is bringing some new changes with it. And by “some,” we mean a lot. Two of these changes have to do with the estate and gift taxes. By 2024, there will be no estate tax. But, for now, if your estate is under $22.4 million as a married couple, you get an exemption. And, since the estate tax is often unified with the gift tax, that further extends the exemption on money you can give away. This new update is another reason you will likely want to look at your estate plan.
New year, new updates! Consult your estate planner to make sure that your plans reflect any changes in your life during the past year.
New Year, New Tax Bill
Unless you’ve been living somewhere with no internet and no cable for the past few months, you’ve probably heard about the new tax bill, which was recently passed by the Senate. It seems like everyone is debating it; and, from pundits to politicians, everyone has something to say, us included. In this article, however, we will be cutting through the vast melting pot of opinions to give you the information you need about how the tax code will affect important areas of your personal and business life.
There’s a lot to cover, so let’s get started!
The 2018 Tax Code: What’s Going On?
What is going on? That is the question on almost everyone’s mind. Well, when it comes to the estate and gift tax, the answer is: a lot.
In 2018, the estate tax is more of a concern than ever before. This tax hasn’t been talked about much until just recently, but its changes will affect many people. Here’s a rundown of how the 2018 tax code will affect your estate tax.
The Estate Tax
If you own an estate, you are probably familiar with the estate tax. The estate tax and income tax are not to be confused, as the former is paid on the transfer of assets from the decedent to heirs and beneficiaries, whereas the latter is the tax on the income that the decedent’s estate generates. Essentially, the estate tax is a tax on your right to transfer your property post-mortem.
In order to calculate this tax, the IRS takes an accounting of everything you own or have an interest in at the date you die. The tax has a high exemption amount, which means that really only the wealthiest top less-than-one-percent of Americans pay it. However, this tax is going to undergo some changes, thanks to the new bill.
First, you should know that in 2024, there will not even be an estate tax. In 2018, however, the estate tax is still live. There is an $11 million estate tax exemption per person ($22.4 million for a married couple). You may be thinking that you’re in the clear for the estate tax in 2018 if you have under that magic $22.4 million number. However, this depends on what year you die. In addition to this info, you should also know what a gift tax is, as that can further decrease the amount of taxes you pay.
The Gift Tax
The gift tax is pretty simple to understand. This tax is executed when there is a transfer of property after someone dies. This differs from the estate tax in that the transfer of property is not paid for, meaning that there is no consideration (money or something equivalent) received in exchange. It is, simply, a gift.
The gift tax exemption is often unified with the estate tax exemption. This means that you can give away up to $22.4 million in 2018 without being hit with any gift or estate tax. If the exemption grows to a larger amount, you can give more away. A piece of good news is that even if the exemption amount shrinks, you won’t lose the amount you’ve given because there is no penalty. So, the question becomes: are you taking advantage of all you can give away in 2018?
In your estate plan, you decide what to do with your assets. Consult an estate planner to make sure that you’re using these estate and gift exemptions to their full potential. There is a lot of opportunity to decrease the amount of taxes you pay, and with the upcoming tax bill, some big changes are on their way.
“It’s beginning to look a lot like…probate!” This grim twist on a classic holiday song is just what will happen if you don’t take the precautions necessary to protect your family after you have passed on. If you don’t know what probate is or if you’re not sure why it’s such a legal boogeyman, this article will help clear that up.
What is Probate?
Consider this scenario. Your close relative passes away. In the midst of the grief and dealing with funeral arrangements, you learn that she didn’t have an estate plan. Now, with all the other burdens that come with losing a loved one, you have to go to court and endure a lengthy, time-consuming process to have a judge (who doesn’t know your family) divide up your relative’s assets and even saddle you with some debt, if he or she chooses. Sounds awful, right?
It is. This process is called probate. The probate court handles estates whose dispersals have not been planned after the death of the owner. The probate court divides up assets and debts, distributing the estate in the way that it sees fit. This winding up is not always done with the best interests of your family in mind—not because of bad faith on the part of the court, but because it doesn’t know your family well enough to know exactly where everything should go.
To avoid this, you should engage in a process known as estate planning.
Estate Planning 101
Estate planning is also a process, except, in this case, it is one that will help your family. When you are planning your estate, you decide many important things, such as where your property will go, who will take care of your children, who your Power of Attorney will be if you’re incapacitated, and more.
With estate planning, among many legal devices, you set up a living will and trust, and leave health care directives for hospitals and doctors in the event you’re incapacitated and unable to make decisions for yourself at that time. Through estate planning, you are able to avoid probate court by making the decisions that are best for your family.
I have a last will and testament. Is that enough?
A common misconception is that a last will and testament is enough to keep you out of probate court. In fact, when people think of estate planning, they probably just assume it’s making a will and shoving that document in the drawer until you die. However, that’s not what estate planning entails. The process is much more detailed and safeguarded.
Your last will and testament is still subject to probate. You won’t get out of probate court that easy. Many experts look at last wills as an interim measure until your living trust and living will are set up.
A last will and testament is not enough. To make sure you are 100% in the clear, with no probate court on your horizon, set up an estate planning consultation.
Merry Christmakwanzakah: Everyone’s Included—Like Your Estate Plan Should Be
One of the best parts about the holiday season is the many, many different celebrations that take place. From Christmas to Kwanza to Hanukkah, the holidays are a time for everyone to see their family and engage in celebrations. And, while you’re with your loved ones, it’s time to think about one of the best gifts you can get them—an estate plan that includes everyone.
Sure, estate planning doesn’t sound quite as exciting as a new Xbox or a car, but, in the long run, it ends up being even more valuable (trust us). Estate planning is the process by which your assets, debts, and estate are assigned and distributed after your death.
Think of your estate plan as a legal toolkit. If you open the kit, you will see many different documents, all of which pertain to a different aspect of your life. However, these tools all have the same goal: avoiding probate.
Probate court is what happens if you do not have an estate plan. The court takes charge of your estate, dividing up assets and debts and winding down the estate in a way that is time-consuming and difficult for your family. A mere last will and testament is not enough. There are many different documents in an estate plan. Listed below are a few of the main ones.
What’s in your legal toolbox?
- Power of Attorney. Your power of attorney is a trusted individual who you pick to manage your financial and healthcare decisions if you are sick or incapacitated to the point where you cannot make these decisions yourself. We all have that relative who we wouldn’t trust to babysit a rock, let alone make life-changing choices for others. By picking your POA yourself, you ensure that you are choosing someone who is competent and responsible.
- Living Will. Also known as an advance healthcare directive, a living will specifies what a person wants to have happen in the event of certain medical emergencies. This way, if you can’t tell a doctor or hospital yourself what you want, your directive will have the plan laid out for you.
- Living Trust. A trust is a three-party relationship. This relationship is of a fiduciary nature. The first party, known as a trustor, confers assets or property to a second party, the trustee, for the benefit of a third party, the beneficiary. The living trust allows for this fiduciary relationship to take place upon your death, when your trustee confers to your beneficiary the property with no probate court acting as middleman.
- 529 Plan. This 529 plan is for people who have kids who are going off to college—if not now, then in the future. The 529 allows you to set aside funds for your kid’s college funds. You may also know a 529 as a “qualified tuition plan.”
- TOD Sheets. TOD—Transfer on Death—sheets do just that: upon your death, property is transferred in the form of a deed. Morbid though the name is, this legal tool is really helpful and operable in many states.
Estate planning also needs to include everyone you want. When you schedule a consultation, make sure that you have a thorough discussion about those you want to include. Don’t forget that you can—and should—make updates and changes to your plan whenever necessary. The above legal tools are just some of what can help you wrap up your estate quickly and efficiently when the time comes.
The holiday season is fast approaching, and deciding what gifts to get the loved ones in your life can be a fun (if not a little stressful!) tradition. If you’re looking to get a unique gift that is long-lasting, beneficial, and durable for your family, think outside the box and consider setting up an estate plan.
Estate planning is the process by which you decide where your assets will go after your death, what decisions will be made (and by whom) if you are incapacitated, where your debts will be assigned, and many more important decisions. Dismantling and distributing someone’s estate is a process, but it is far easier and cheaper to carry out when you have an estate plan than it is to go to probate court.
Think of probate court as the Abominable Snow Monster. You want to avoid it at all costs because, unlike Bumble in Rudolph the Red Nosed Reindeer, probate court never turns out to be nice. Instead, probate is a lengthy, time-consuming legal affair that distributes your assets and debts with no regard to what is best for your family.
But, don’t worry! In this article, we’ll tell you how to stay out of probate court by detailing what generally goes into an estate plan. (Remember, these are just a few of the many legal tools you can have in your estate plan).
Key Documents in Your Estate Plan
- Living Will
A living will, as you may or may not know, is also called an “advance healthcare directive.” The living will allows you to determine the healthcare decisions that will be made in advance if you are too incapacitated to give directions to the hospital yourself.
A living will is useful for anyone over 18 to have because, once you are no longer a minor, your parents cannot give the hospital directives in your stead. It’s important to have a backup plan.
- Living Trust
A living trust details how you want your assets, property, and funds to be distributed after you die. It also will describe who will take care of your minor children (if you have them), as well as any specific instructions you have regarding your assets. The difference between this and your “last will and testament” is that a living trust is not subject to probate.
- Durable Power of Attorney
A durable POA is a trusted individual that you name in your estate plan. He or she will make financial and healthcare decisions for you in the event that you are incapacitated. By naming the POA yourself, using your own judgment (as opposed to that of a probate court, who does not know your family dynamics), you can rest assured that you have someone who will handle your affairs responsibly.
- Last Will
Your last will and testament details how you want your assets divided upon your death. This is different from a living trust because this does have to go through probate. Therefore, the last will and testament is mentioned in this list because it can be viewed as an intermediate document until your living will and living trust are set up.
Again, these are just some of the many resources you have that will allow you to avoid the law’s Abominable Snow Monster. You can also set up forms detailing who your beneficiaries are, where your debts will transfer, and other important decisions, all of which wrap up your affairs properly. This Christmas season, give your family the gift of security and peace of mind by scheduling a consult to set up your estate plan.
Winter weather is fast approaching (if not here already), and with it comes snow, sleet, and ice. But not in the lovely, sunny South Florida! While we’re lucky enough to not be iced over, your assets can still be frozen. Follow these tips to avoid having your assets frozen this winter.
How Assets Freeze
First things first: what are frozen assets?
Frozen assets are owned assets that cannot be bought or sold in any way because of a debt that still requires repayment. Until the debts are paid or satisfied, the asset’s owner cannot do anything with the asset.
To understand how to circumvent frozen assets, it’s important to know how the process occurs. One way your assets can be frozen is in probate court. Probate, as those keeping up with these articles know, is the court that you want to avoid at all costs. If you die without an estate plan (which we’ll get to in a moment), your assets will end up in probate court to be distributed.
The probate court also has to verify your will, if you have one. This process can take a long time, even more so if someone decides to contest your will. During the verification process, your assets are frozen. Even for time periods of up to several years, they can be frozen.
If that wasn’t bad enough, once the court verifies your will, they will then distribute your debts along with the assets. This has the potential to cause your family hardship if they not only have to go through probate, but shoulder your debts at the end of the ordeal.
Staying Out of the Cold
To avoid sending your assets to the Age of Winter, an estate plan is key. Estate planning is the process by which you arrange for the management and distribution of your estate after your death or if you are incapacitated. Through estate planning, you can minimize taxes and ensure that your family will stay out of probate court and your assets left unfrozen.
This important step ensures that a person’s wishes are upheld and their decisions, if they are unable to make them, are left to someone who they trust. It may be tempting to set aside the thought of estate planning for now—after all, not many people see their death as imminent—but that is not a wise choice. No matter how large or small, you do have an estate, and setting up arrangements for worst-case-scenarios is vital to your family’s financial health.
Don’t let your assets be frozen this winter. Set up an estate planning consultation today.
That title might sound a little ominous, but it’s not, we promise. Thanksgiving is coming up and the time-honored tradition is to go around the table with everyone saying what they are grateful for. However, don’t just be thankful this season: be careful as well.
You may have an estate plan already, but did you know that you should continuously review and update it? It’s not just about documenting it and slamming the drawer shut. You need to update your estate plan and keep it current for it to be most effective. In this article, we will discuss the need for updates, as well as the misconceptions surrounding self-written and online wills.
Keeping it Current
Your Turkey Day list of what you’re grateful for probably changes yearly based on what happened in the past 365 days. Similarly, your estate plan can change too, depending on changes in your life (marriage being the main one) or family. While you may think, “Oh, I’ll get to it eventually,” regarding changes to your estate plan, that’s not always the case. Forgetting to update and review your estate plan can be disastrous.
For example, if you get married and do not update your estate plan before passing on, your plan will not reflect the changes in finances and property that come from marriage. It’s always better to be safe than sorry. Even if you don’t think you need to make any changes to your estate plan, review it ASAP, just to be sure.
Online and Self-Written Wills
There are different services that allow you to write an online and/or self-written will. These services promise the convenience of being able to sit at home on your laptop and just get it done inexpensively. That sounds nice, but, unfortunately, these services often don’t give you a finished product that includes everything you may want your family to have. DIY-willmaking often skips important steps that would otherwise allow you to avoid probate. If you want to do anything complex with your will, your self-written document will likely not contain the proper language, particularly surrounding land (land-based contracts must be very specific in their phrasing). Your relatives might end up having to go to court and spend thousands to contest your will and figure out what it means.
Forgetting simple things is easy on self-written wills because, to someone without legal training, the legal language is not easy to get right. Even if your relatives don’t contest the will, courts won’t follow the provisions if they are not properly written, meaning that your self-written or online will has all the effect of a notarized shopping list.
Keeping an updated, regularly-reviewed estate plan is really the only way to properly and effectively prepare for your future and the future of your family. Self-written and online wills generally miss the important elements, so scheduling an appointment to have it done properly by lawyers is the best way to ensure that you’re not only thankful this Thanksgiving: you’re careful, too.
Child safety and protection is a major concern this month, with officials and teachers giving many different tips on keeping your kids safe from all types of dangers. However, one piece of protection advice you may not have heard is estate planning.
Estate planning allows you to designate where you want your property to go after you pass on. There are many different estate planning tools that benefit your children because, as stated in our title, protecting your children is protecting your legacy. In this article, we will discuss these major legal devices that will protect your children’s inheritance and honor your wishes.
Wills, Trusts, and 529 Plans
There are many different ways in which you can leave your property to your children, but wills, trust, and 529 plans are three of the major ones. Here is a brief overview of each:
· Wills. A will is a legal document by which someone designates how they want their property to be distributed after they die. Wills also contain instructions as to who will execute the requests in the will (that person is known as the executor). Note that wills do NOT get you out of probate court, and just having a will is insufficient.
· Trusts. These are more complicated than wills, and they take more time to manage and create. Trusts do ensure that you won’t wind up in probate court, dealing with that expensive and time-consuming nightmare. Trusts are fiduciary agreements. The trustor gives a trustee the right to hold the trustor’s property or assets for a third party’s benefit. This third party is known as the beneficiary. Trusts take effect as soon as you create them, whereas wills take effect after you die.
A living trust is revocable, meaning that the trustor can make changes and modifications as they so choose. This is beneficial, as situations and circumstances tend to change as time passes. An irrevocable trust, by contrast, means that it cannot be altered without the beneficiary’s permission.
· 529 Plans. A 529 plan is an excellent way to invest in your child’s education. These plans allow you to set aside money for your child’s college education. The name 529 comes from § 529 of the IRS Code. 529 plans have been around since the mid-1990s. There are special tax benefits that come along with this type of plan and, usually, your child’s choice of school does not matter in order for them to get the 529.
There are usually two types: prepaid and savings. Prepaid plans allow you to pre-pay all or some of the cost of college education. Savings plans work like a 401k; you invest your
contributions, and the account varies based on the performance of the investment option you chose (mutual funds or something else).
Protecting your children by making sure that you have a plan for your property after you die might not be broadcasted among the many child safety tips, but it is certainly important. By scheduling an estate planning consultation, you can ensure that you are preserving the best
When you think of November, you probably think of turkey, football, the upcoming Thanksgiving holiday, and more. But, what you may not realize is that November is National Sleep Comfort Month. During this month, people talk about and discuss ways to improve their sleeping. Without an adequate amount of sleep, a person can experience some negative ramifications that affect their whole life. To sleep well, you need to not feel stressed. And there’s nothing more stressful than risking your property.
Luckily, we can help. Protecting your property is a good way to reduce stress and ease into the month of November with a good sleep pattern. With an estate plan, your property will be protected, giving you peace of mind.
How Does Estate Planning Protect Your Property?
You may be wondering how exactly an estate plan protects your property, as it’s not as though it’s a security system or guard dog. But an estate plan actually is one of the greatest protections you can have.
Estate planning is the process of putting together a plan for where your property will go after you pass on. That’s not the only function of an estate plan, however. An estate plan also allows you to have a trusted individual make healthcare decisions for you in the event of a crisis. A similar trusted person makes decisions for you financially with the “Power of Attorney” estate planning tool.
If you don’t get together an estate plan, you will be looking at some serious risk to your property in the form of probate.
Property’s Downfall: Probate
If estate planning is your alarm system, think of probate as the burglar that the alarm system is designed to stop. Probate court is the legal process of passing on the property of someone who dies without an estate plan. Just having a will is not enough to get you out of probate court.
Probate is costly, time-consuming, and all-around miserable for your family. The court takes your property and divides it how it sees fit. Your property might even go to the state, which will sell it. This unappealing result is what happens if you don’t create a plan for what will happen to your property after you die.
Morbid though this conversation is, it’s important to think about, and it does have a positive upside: with estate planning, you can avoid the doom and gloom of probate. You’ll be able to sleep easy knowing that your property is protected and secured. Schedule an estate planning consultation today!
Sunday, November 5th was daylight savings time! Who doesn’t love the extra hour to sleep in? With daylight savings time, there are tons of different things you can do with your extra hour. Sure, you can pick to watch an extra episode or two of your favorite show on Netflix, but you can (and should) switch it up this year and do something that will benefit your future and your loved ones’ future for years to come: estate planning.
Schedule an estate planning consultation! Use your extra hour wisely, and you will be able to see the long-term effects of such diligent planning. In this article, we’ll tell you a little about what to expect from your estate planning consultation, as well as extra information about some main points to know.
When you go to your estate planning consultation, the discussion is going to focus on your needs and the needs of your family. However, as with anything, you might want to brush up a little on the topic before you go to the consult.
There are a variety of different estate planning tools such as wills, trusts, powers of attorney, health care surrogates, and more. Here is a brief overview of the major terms to know.
Estate Planning Cheat Sheet
- Wills are a little different from estate plans, but they are important to know about anyway. Wills go into effect when you die. Wills direct who will receive your property after death. Wills don’t actually help you avoid probate; that’s not how you dodge that bullet. The only way to avoid probate is through estate planning, which is covered in the next three points.
- Trusts go into effect once you create them. You don’t have to be dead, as with a will. A trust minimizes estate taxes. It is a right in property that is held in a fiduciary relationship by one party. The trust benefits the other party. This second party is known as the beneficiary.
- Powers of Attorney. Your power of attorney acts on your behalf in financial matters if you are unable to take control of your matters for yourself. A power of attorney is a good way to make sure that you can have someone responsible taking care of your finances.
- Healthcare Surrogates. A healthcare surrogate makes healthcare decisions on your behalf if you are unable to do so. Much like your POA, you want to make sure that your healthcare surrogate is responsible and knows what you want. A healthcare directive, to distinguish the two, is a written order that tells the doctors and hospital managing your care what you want to have happen if you are incapacitated.
With your extra hour, how will you spend it? For one of the days, you can use the extra hour to schedule an estate planning consultation and ensure that you have control of your future (then, of course, you can use the other days’ hours for Netflix, naptime, and relaxing).