Oscars 2020: Keep the Drama On-Screen, Not Off

Posted by on Feb 8, 2020 in Legal News |

Who are your picks for the Oscars? Perhaps you have your bet on the dramatic, eerie Joker or the gritty war movie 1917, directed by Sam Mendes. Regardless of whoever wins, it’s safe to say that this preceding year has been a great one for filmmakers and moviegoers alike. However, while we all love to see drama onscreen, having drama in your life off-screen is far less entertaining. 

But, alas, people go through events that shake up their lives, and, sometimes, drama cannot be avoided. In this article, we will talk about how your estate plan should adopt to some of the biggest dramatic changes that you might (but hopefully will not) go through at some point. 

Divorce

Once a divorce is finalized, a spouse will be stricken from your will and estate plan automatically in most states. However, people don’t always get divorced when they decide they want to. If you and your spouse are estranged but still married, he or she could still take under your estate if you die. Another example is if you and your spouse are still in one another’s medical plans as POAs, that might still be valid. 

The wisdom of having an estranged family member as your power of attorney is debatable. You want your POA to have your best interests at heart—something that is not always the case even in the most amicable of divorces. Bottom line: change your estate plan to reflect changes between you and your spouse, even before the divorce papers are finalized. 

Other Peoples’ Divorces

Divorce is hard outside of the nuclear family. You might have loved your child’s spouse but, now that they are divorcing, it would be in the family’s best interest to exclude your child’s spouse from your will. Make sure that you keep drama to a minimum by including people who are actually part of your family in your will. If this is a change you feel you need to make in your estate plan, do it sooner, rather than later.

A Death in The Family 

A death in the family works the same way. While the deceased family member will not take your asset if they die, the person who does get the asset might not be your second choice. If you intended to leave money or property to a family member who dies, make sure your estate plan reflects that change. Pick where you want the money or property to go in the absence of your original choice. This way, you can keep your estate plan concurrent with your wishes.

Estrangement 

Estrangement is, sadly, common in families. Every family has its ups and downs, and statistics show that 10% of American mothers are estranged from at least one of their adult children. That same study found that 40% of people have been estranged from a family member at one time or another. 

Whether that estrangement is permanent or temporary is something that only you can answer. However, make sure that your estate plan reflects estrangement. Include or exclude people, depending on what works best for your family dynamics. You can always make changes later on—they key is keeping the plan current. 

Sickness 

Another interesting statistic is one regarding illness in families. Six out of ten Americans say that they have a family member who is chronically ill. Sickness is something with which we are all, unfortunately, familiar. Therefore, considerations for end-of-life care (such as a medical directive or power of attorney) are an important part of estate planning. You want medical professionals to act in a way that reflects your wishes, and you also want your power of attorney to do the same.

Needless to say, this article is somewhat of a bummer. While, hopefully, you never have to experience these events, it’s important to be prepared just in case. Keeping the drama to a minimum will allow you to deal with them and move forward. By being proactive in your estate plan, you can prevent a bad situation from getting even worse. 

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Tax Season is Upon Us!

Posted by on Jan 17, 2020 in Legal News |

Well, it’s here again. Tax season is inevitable, as the old saying goes, and this article will give a brief primer on the top ten things you should know about tax season, including why filing is important, how life changes can affect your taxes, and, of course, penalties you can incur if you run afoul of the IRS.

Top Ten Tax Things to Know 

10. E-Filing 

Coming in at number ten (though it could fall anywhere on this list) is e-filing. E-filing is a good way to save money, as opposed to doing your taxes on paper and mailing them in via snail mail. You can use tax software (like that at H&R Block, for example) to help you save time, trees, and, most importantly, money. 

9. Always Look for Exemptions 

Being married and having kids are two major examples of exemptions. Chances are, even if you don’t fit into either category, you might fall into an exemption that will save you money. For example, if you fall into a lower tax bracket, you might be eligible to save on your taxes. Taking your time to find out whether you can save is a wise idea.

8. Three Words: Adjusted Gross Income 

That’s what really matters. Your AGI (Adjusted Gross Income) is the number you get after the government subtracts expenses, like IRA contributions or education tuition. AGI determines credits and deductions we can take. After deducting those, we get our taxable income. The word “AGI” is all over your tax forms because it is really important at the end.

7. Credits = Money Saved

Exemptions and credits are not the same thing, even though they’re both good. An exemption reduces your taxable income. Credits actually reduce how much taxes you owe. Credits are simple to understand: a credit is money you don’t have to hand over to the government. 

6. Standard Deduction

Standard and itemized deductions are always somewhat of a source of confusion for people. Here are brief definitions for both. First, a standard deduction is worth somewhere between $5,800 and $11,600. If you have simple taxes, you don’t have to go through a huge process to get deductions. A standard deduction is just a reduction off your taxable income. It’s a flat number. You take it, and you pay less.

5. Itemized Deduction 

…Which then brings us to itemized deductions. For itemized deductions, you will need to list out each deduction you can take. If your itemized deductions together equal more than your standard deduction, this is the deduction you take. Examples of itemized deductions include charitable donations, mortgage interest payments, and medical expenses.

4. Why Filing Is Important (AKA Don’t Procrastinate)

Filing is important because there’s no way around it if you make over a certain amount. Because figuring out what exemptions you qualify for and what deductions to take might take some time and digging, you should get started ASAP, not on April 15th or the day before.

3. Ok, So You Procrastinated 

However, someone is always going to procrastinate for whatever reason, and the IRS knows that. You can file for an extension if you need more time. This is not a good idea if you’re putting it off because you don’t have the cash to pay it. If finances are the issue, you can use a credit card (if your bill is low) or go on a payment plan. 

2. Penalties 

If you don’t pay your taxes, bad stuff can happen. The IRS will send you some scary letters and charge you fees for not paying. In very extreme cases (the big-name, Al Capone tax evasion cases), you can even do prison time. If you’re having trouble paying, you can talk to the IRS about a payment plan. They will take it easy on you if you do that, but not if you simply don’t pay.

1. Don’t Mess Up Your Filing Status 

If you get one thing right out of this entire process, it needs to be your filing status. This is the question on the tax form that asks you if you’re single, married, etc. This status will affect how much you pay, and getting it wrong will be a huge hassle.

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What to Do Before You Get Engaged/Married in 2020

Posted by on Jan 10, 2020 in Legal News |

Do you have big plans in 2020? If you’re planning to get engaged or married in 2020, first off: congrats! Secondly, you want to make sure that your estate plans are in order before you move forward. Ensuring that your estate plan reflects the new addition of a spouse can save you quite a lot of headaches later on. Don’t worry—making an appointment with an estate planner won’t take too long, and it won’t be (too much of) a buzzkill on the upcoming nuptials. Here are some things to think about before you tie the knot. 

Prenuptial Agreement

Ah, the dreaded prenuptial agreement, AKA “a prenup.” A prenup provides asset protection, not just in the case of divorce but also in the case of death (which might be a more appealing way to sway your significant other into signing one). A prenuptial agreement addresses what happens with alimony and assets if either of these things occur. It also can address how you want your kids from another marriage to be treated in terms of asset protection. Additionally, a prenup can handle how debts are divided between spouses if there is a divorce or death. A prenuptial agreement is, of course, signed before you get married, unlike a postnuptial agreement.  

Postnuptial Agreement 

A postnuptial agreement, as the name suggests, is signed after you get married, as opposed to being signed in contemplation of the marriage. A postnuptial agreement has effectively the same protections as a prenup; the timing is just different. In almost all states, this agreement must be in writing. In some states, it must be notarized. A postnup outlines the obligations and responsibilities of each partner in the event of death or divorce. 

This makes the list because, if you’re in a time crunch and will be married before you can set up a time to make a prenup, a postnuptial agreement is a viable option so that you’re not left in the lurch.

Power of Attorney 

A common misconception is that a spouse automatically becomes your power of attorney once you two are married. This is not true; you have to designate your spouse as your POA. A power of attorney is someone who has the ability to make decisions on your behalf in the event that you are unable to do so yourself. Obviously, this must be someone you can trust to behave rationally and uphold what they know to be your wishes for healthcare and finances. Hopefully, you feel that way about your spouses. Another common power of attorney choice is your children.

The Will

While a will isn’t the perfect way to protect your assets, it is better than nothing. If you are not married and you die intestate (without a will), your spouse-to-be will not inherit anything from you. They will receive nothing from your estate. Setting up a will or, even better, a trust, can ensure that you don’t leave your spouse hanging if you die before you are married.

Trust 

Trusts are flexible, useful estate planning tools. If they are done correctly, you can avoid probate and its expenses, and you can keep your estate’s affairs private. A trust is a legal document that creates a fiduciary relationship between you, your trustee, and, later, your beneficiary. It is a way to transfer assets without going through probate. You can use a trust to transfer assets to your spouse, or you can even create one with specific provisions that ensure your kids will get a share of your estate. Trusts are very wide-ranging and can do a lot for asset protection.

Okay, so maybe this isn’t the most fun thing to do before you get married. But, these types of documents are essential to financial health. Take a break from cakes, tuxes, and dresses and get your estate plan with your new beau squared away. 

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Did You Know January is the Busiest Month in Which to File for Divorce?

Posted by on Jan 3, 2020 in Legal News |

According to divorce lawyers, January is “Divorce Month.” There are plenty of reasons for why January ends up being the busiest month in which to file divorce. Usually, families want to stick it out through the holidays before making a big chance. Who knows, maybe someone’s New Year’s Resolution is to get divorced. 

Whatever the reason, there are some things you need to know when you’re in the process of getting divorced. And no, we won’t put you through the, “Are you sure you want to get divorced?” question. Here are five things to know about getting a divorce. 

1. Get Your Financial Documents Together 

Divorce relies heavily on documentation for the purposes of things such as alimony, marital property, and child support. Financial records, phone records in some cases, mortgages, and receipts for sale are all things you might have to show to a court to prove financial status or lack thereof. Start digging around for that stuff now, whether you have copies online or in boxes somewhere. It’s always wise to make copies of physical documents, just in case. 

2. Update Your Estate Plan 

You probably don’t want your spouse as your power of attorney, especially if you are dumping them, or vice versa. Update your estate plan to make sure that they are stricken from the plan where you want them to be. While in some states, divorce automatically invalidates some provisions, the pre-divorce limbo period doesn’t invalidate anything. 

3. Ask an Attorney about Joint Bank Accounts/Credit Cards 

Joint bank accounts and joint credit cards are tricky. They might have seemed like a good idea at the time, but now they’re a mess because the finances are all tangled up. Talk to an attorney about getting the finances separated and handling the joint bank accounts. You might need to call in an accountant, but the first step is talking to an attorney. 

4. Custody Issues 

A lot goes into custody. The prevailing standard in most states is the best interests of the child or children, and that “best interests test” depends on a whole penumbra of factors. You will likely need to sit down and work out your work schedule, financial stability, and housing situation when you’re discussing custody. The court will look to the best interests test when determining custody. It is best to keep custody battles between you and your spouse and avoid dragging kids into back-and-forth between the two of you.

5. Know When You Are/Aren’t Single 

This one’s about adultery. If you’re still legally married, it is unwise to move in with or start a relationship with someone else, as your spouse could claim that as adultery. Even if you’re living separately, some jurisdictions will look on that as adultery. Adultery doesn’t affect the division of marital property, but it can affect other considerations of the process. Save relationships and dating for when this process is over. You’ll likely be far less stressed out and better able to focus on a new relationship when the divorce is settled, at any rate.

According to the CDC, the US divorce rate is 3.2 per 1,000 people. While this is a decrease, the decrease is caused by people not getting married, as opposed to just being better at getting married. All this to say: divorce is common. Don’t be afraid to ask for help or advice, as you are not alone through this process, though it might seem like that at times. Help is out there, and the first step is to talk to an attorney.  

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Forget the Big List: Try One Resolution This Year 

Posted by on Dec 16, 2019 in Legal News |

So, here’s the thing about New Year’s resolutions: they don’t always work out. Whether it’s a new diet, exercise plan, or attempt to become more organized, it’s not always easy to get a huge list of resolutions straightened out. Let us present to you a new idea: just one resolution. You can make the resolution to get your finances in order. This broad scope is not only going to be a huge accomplishment; it also will have a lot of long-term benefits.

The Problem with the Big List 

A New Year’s resolution list can operate somewhat like a “To-Do” list, though it’s couched in more goal-achieving language. If you’ve always disliked to-do lists, fear not: Harvard Business Review is on your side. Harvard Business Review did a study on the effectiveness of to-do lists and found that they “don’t work.” Your brain can really only handle seven options before it mentally checks out. When it does check out, you end up ticking off the easy things on the list for a quick dopamine rush, avoiding the bigger projects. 

An alternative to this is a different way to set goals: scheduling their completion at a certain time. So, if you choose to get your finances in order, you can schedule appointments with an estate planning attorney or sign up for money-management classes. This way, you avoid the to-do list rut and actually set yourself on a path to success.

What “Finances” to Get in Order

“Get your finances in order” can mean a lot of things. Whether you’re trying to cut spending or pay off bills, financial health involves a lot of different, occasionally unpleasant things. We’d all rather buy a fun gift for ourselves than pay off an overdue bill. However, financial healthiness is a goal that will involve some hard work.

Asset Protection 

One part of achieving financial health is asset protection, and this doesn’t have to be painful at all. Setting up an estate plan will allow you to decide where you want your assets to go after you die. It also allows you to set up end-of-life and sick care for yourself in the event that you become unwell. Another type of asset protection can involve setting up a trust for loved ones, thereby providing for their financial health too. That’s the beauty of this goal—it helps protect other people as well.

Figure Out What the Issue Is 

When it comes to achieving financial health, we usually have to figure out first what the problem is. Luckily, most of us probably have some sense of where the financial health issue is. If you don’t, go look at your bank account. That will tell you what you’ve been spending money on, whether it’s Amazon purchases or other needless spending. This will help you recognize where you need improvement. You can always talk to a financial advisor about getting yourself in check. Remember, this goal is more of a long-term one. 

Long- vs. Short-Term Thinking 

Just like the common goals of losing weight or eating healthy, achieving financial wellness is one of those goals that isn’t going to have immediate, drastic results right away. Often, you can simply chip away at problems until they become manageable. But that is a good start, in and of itself. Estate planning, especially, is a financial tool that will pay off in the long-term.

Hopefully, we’ve convinced you to give our way a try. Instead of big, exhaustive New Year’s list, which can seem daunting at worst and a throwaway item at best, try just one New Year’s resolution that will have long-term impacts: improving your finances. 

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How Grandparents Can Protect Their Assets 

Posted by on Dec 14, 2019 in Legal News |

As a grandparent (or a loved one of a grandparent), you know how much you love your grandkids. You want to be able to provide for them, at least in part, whether that involves time, attention, or even money. If you want to protect your assets and help your grandchildren out later, you can do so through the establishment of a trust. In this article, we’ll talk about the benefits of establishing a trust for your grandkids. This is by no means an exhaustive look—it’s more of an overview—but it’ll get the basics down. 

What is a Trust? 

Essentially, a trust is a legal construct. It is a three-party relationship between you, your grandchildren, and a trustee. You transfer nominal title of the property to a trustee, who then transfers actual title of the property to your grandchildren at an agreed-upon time period. Sometimes, grandparents will choose certain milestones to release property or money to their grandchildren (eighteenth birthday, college graduation, etc.). Or, they’ll set aside money to be transferred when the grandchild is attempting to meet a specific goal, like buying a home or starting their own business.

How Do I Set One Up? 

Trusts aren’t too difficult to set up. An attorney will need to work with you to set one up, and you also might have to involve your bank to discuss investment options or other financial planning considerations. What is for sure is that you’ll need an attorney. An attorney will help you decide how you want to structure your trust. For example, if you set up a gift trust, you will not be able to revoke it and reclaim your money. If that doesn’t sound appealing to you, there are other types of trusts you can create. However, the bottom line is that you will need a lawyer.

Types of Trusts

Individual 

If you’re leaving money or assets to just a few grandchildren, you may consider setting up an individual trust for each grandchild. Grandparents usually put equal amounts of money into every grandchild’s trust. Again, this is dependent on what works best for your family size. A family pot type of trust is another option.

Family 

The family trust fund is another option. If you have a lot of people in your family (and thus a lot of beneficiaries), you might start a large fund and have your trustee distribute assets at certain times or upon certain occasions. This pot of money, so to speak, is a single trust for all your grandchildren and their descendants. Note that these trusts require the trustee to have a lot of discretion, so make sure you are okay with that. 

What Do These Include? 

Don’t worry—these trusts are not a free for all. You can set up your trust with instructions and rules that govern the disbursement of the money. For example, you might set up a milestone distribution program as discussed above, or you could set aside money to pay for college tuition. Involve your trustee in these discussions. 

Protecting the Trust

Last, but certainly not least, is the idea of protecting your trust.  Grandchildren don’t always behave according to plan. There might be substance abuse issues or similar problems that would caution a reasonable person to hold back on fund distribution. Again, this is where discretion to the trustee comes in handy. You can leave instructions with him or her to hold back on disbursing funds in the event of an issue with the proposed beneficiary.   

An estate planning attorney will help you work out the nitty-gritty. You will need to talk to your family and work with them to decide how you want to structure your trust and what specifications you need to think about. It goes without saying, but every family is different. Your family has its own set of challenges, and structuring a trust with those in mind will be a great long-term benefit.

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