Forget-Me-Nots: The Most Commonly Forgotten Things About Estate Plans

Posted by on May 9, 2018 in estate planning, Trusts |

Pretty much everyone has heard, one way or another, about estate planning, even if they don’t call it that specific term. Whether it’s representation in popular culture (seeing a dramatic last will and testament on a TV show) or your relatives mentioning something about it at the dinner table, you’ve probably run into estate planning more than a few times. What people may not know is that this field is really broad. There are tons of different facets of estate planning, and that’s a good thing! If there weren’t, people wouldn’t get the results they wanted.

Here are some of the most commonly-forgot things about estate planning.

There are a LOT of Documents

As mentioned above, there are many different tools for an estate plan besides a will. For example, there are 529 plans, which allow you to set aside money for a kid’s college at a later date. There are also documents concerning your health, family, and financial care that come into effect while you’re living. Estate planning isn’t just a posthumous thing (though it’s definitely relevant). Here are two major documents that you’ll need while living.

Healthcare directive. You may or may not have specific concerns when it comes to your medical care and what you want done. A healthcare directive ensures that, if you are too incapacitated to tell the doctors and nurses what you want when you’re in the hospital, the directive will have your requests laid-out. It’s a way to plan ahead for every eventuality.  

            Power of attorney. A power of attorney helps manage your finances if you are, like with the healthcare directive, too sick or incapacitated to manage them yourself. This POA is someone you trust, who you know will do the right thing with your money.

Living Trusts Exist, Too

Living trusts are actually, in some ways, preferable to last wills and testaments because they go into effect immediately, and you can avoid probate court if you have one (which you cannot do if you just have a last will). A living trust has three parties: a trustee, a donor, and a beneficiary. You are the donor, and you grant nominal ownership of your assets to the trustee. At the time you specify (after death, for example), the trustee gives ownership to the beneficiary. You can bypass probate with this, allowing your beneficiary to get the assets immediately.

You Can Update at Any Time

Estate plans can (and should!) be updated at any time. Whether you’re updating your plan to reflect a change in your family or finances, you need to ensure that you move quickly on the updates, as you never know when your plan will need to go into effect.  

It’s Really, Really Necessary

The last main point about estate planning is just how vital it is. You don’t want to be dragging your family through the time and expense of probate court, where a judge divides up your stuff without real regard to how you would have wanted it divided. Estate planning isn’t just good for your future—it’s good for your family’s.

And there you have it! These are just some of the many great aspects of estate planning. Set up a consultation today.

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Spring Cleaning: Don’t Forget to Update Your Estate Plan

Posted by on Apr 25, 2018 in estate planning, Trusts, Wills |

Spring cleaning, in a way, is the final hurdle you have to get over before you can fully enjoy summer. Whether you’re excited or not, it’s here, and it doesn’t just apply to the nooks and crannies of your house. Estate planning is a way to ensure your assets are transferred and distributed the way you want. There are many different documents and tools you can use to safeguard your family after you pass on, but all of them have a similar characteristic: they need to be updated regularly to make sure they’re covering what you want them to cover.

In this article, we’ll discuss the various ways in which your estate plan can be updated. You should look at your plan to see if you need to make these changes. If so, consult your estate planner today.

New Season, New People

Families change, and your estate plan should reflect this. Perhaps new people have come into your life that you want to include in your plans. Or, conversely, maybe there have been changes in your family that require you to consider dropping people from your estate plans and substituting others in their place.

For example, let’s say you have a living trust. (For reference, a living trust is a three-party fiduciary relationship between you, the donor, a trustee, which is the person who takes nominal ownership of your assets, and the beneficiary, who gets the assets when you tell the trustee to transfer them). Your trustee is a relative, and your beneficiary is one of your children. Assume that your relative passes away before you. You then, at that point, need to ensure that you have a new trustee to take the person’s place. Or maybe your trustee is fine, and you want to add more beneficiaries.

These examples are just some of the many ways new circumstances can require new people. Don’t wait to add them in—the sooner the better.

New Season, New Documents

There is a wide range of documents that can go into your estate plan. Don’t settle for what you have now, as situations can arise that lend themselves to the opportunity to add new tools to the mix.

One of the best things about estate planning is the opportunity to adjust and individualize what you need. An example of such a change is your kids and college. There are tools in the estate plan toolkit that allow you to pass on college savings to help your kids pay for college, should they decide to go. Adjusting your estate plan to encompass new plans like this is easy and very valuable to your family.

Changes in the law can also mean opportunities to adjust your estate plan. Recently, the gift tax exemption has increased, along with the estate tax exemption. These two can be grouped together, which means you can lessen your tax burden through certain financial maneuvers (i.e. gifting more money now instead of waiting until you pass away).

As you can see, there are many reasons to update your estate plan this spring. Spring cleaning is here! Take advantage of it by making changes wherever you need to.

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March Madness: Who Will Make The Cut?

Posted by on Mar 29, 2018 in estate planning, Trusts, Wills |

March Madness is upon us! This is the most exciting season for college basketball fans, and everyone is waiting with bated breath to see how their brackets will turn out (for some of us, our answer came disappointingly early).

March Madness involves picking the right people to carry out a common goal, and, in that sense, planning your estate can be viewed a lot like picking your bracket. You need to have the right people in the right positions to carry out the goal of distributing your assets fairly after you die.

The Different Spots to Fill

There are many different spots to fill when it comes to your estate plan. There are different documents, appointees, and other means by which you can control your asset distribution.

Here are a few of these positions that you need to consider filling.

  • Beneficiaries are people you designate to receive your assets. You want your things to go to people you trust. Select beneficiaries who will be able to handle the assets you transfer to them. For example, the cryptocurrency Bitcoin has been making the headlines lately. It is a digital currency that is volatile, tradeable and an asset that only experienced people should handle. If you’re selecting a beneficiary to get your Bitcoin, you want to make sure that they are knowledgeable about the currency and able to handle it. Think this carefully about all your assets.
  • If you create a living trust, you will have a trustor (you), trustee, and beneficiary. You, the trustor, transfer property to the trustee, who becomes the nominal owner until they grant the property to the beneficiary. They grant the property to the beneficiary at your instruction, whether it’s when the beneficiary reaches 18 or at some other point. Pick a trustee that you know will follow your instructions down to the letter.
  • In an estate plan, you can also include instructions on who will be the guardian of your minor children. We don’t need to tell you how important it is to pick the right person—you already know. This is another reason why estate planning is so important. If you have kids, you need to make sure that you have peace of mind on what will happen to them if you die.
  • Power of attorney. Your power of attorney makes financial decisions for you in the event you are too incapacitated to make them yourself. In your estate plan, you can choose who this important person will be. After you pick the person, you can work with them to ensure they know your wishes and how to carry them out if something happens.
  • Healthcare directive. This isn’t necessarily a position so much as it is a set of instructions. A healthcare directive details what a hospital should do for your medical care if you’re too sick to voice your own wishes. This way, you get the care you desire when you need it most.

Much like your March Madness bracket, you need to make sure that the people you choose are able to make the cut. Pick individuals who are responsible and able to handle the duties you give them and follow your directions precisely.

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Love is Spelled T-R-U-S-T

Posted by on Feb 28, 2018 in Trusts |

It’s the season of love; Even after Valentine’s Day there’s still plenty of leftover decorations to go around. However, you don’t just spell love “L-O-V-E”; there’s another way to spell it: T-R-U-S-T.

We’re talking about estate planning. While setting up a trust for your kids, grandkids, and relatives might not be as flashy of a gift as a new Ferrari, it actually will have even more value in the long run. There are some common misconceptions about trusts—or, rather, about last wills being better than trusts—so, in this article, we will clarify what a trust is and why it’s beneficial.

What is a trust?

A trust is a three-party relationship. The relationship consists of the trustor, trustee, and beneficiary. The trustor, also known as a donor, conveys property or assets to the trustee. The trustee acts as a receiver. After the property is transferred to the trustee, the trustee acts as a nominal owner of the assets. At the moment the trustor specifies (usually upon said trustor’s death), the trustee conveys the property to the beneficiary, who then becomes the property’s owner.

Lastly, you should know what the term “trust agreement” means. A trust agreement specifies the rules of the trust and manner in which the trust should be followed. There are also federal and state law rules that must be followed in conjunction with the provisions of the trust agreement.

There are many different reasons to get a trust, including reducing your estate tax, protecting your assets after you die, and avoiding probate court. There are many different types of trusts, so consult with your estate planner to find out which one is best for your circumstances.

Why not just get a last will and testament?

A last will and testament goes into effect after you die. It also must go through probate court, and you are often subject to more taxes than you would be with a trust. Probate court is a long, arduous process, and your beneficiaries do not receive their gifts immediately. Though a will is cheaper to set up, it does not pay off as well in the long run.

What are the benefits of a trust?

There are several benefits of a trust. First, you can avoid probate court, as stated above. Second, a trust is effectively immediately and can be changed if something happens. When you set up your trust, it is known as an inter vivos trust. You then decide if it is revocable or irrevocable. Revocable trusts allow you to change your mind. This flexibility is beneficial. Thirdly, you can shield your estate from certain taxes through a trust, and, lastly, you are able to decide the manner in which your assets are distributed, as well as the timing. These four benefits are just some of the many that make a trust a great idea.

Because of the safety and reliability a trust provides, it’s clear that there’s more than just one way to spell “love.”

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Divorce’s Impact on Your Estate Plan

Posted by on Jan 29, 2018 in estate planning, Family Law, Trusts, Wills |

Divorce is a bummer (or maybe not, depending on your situation). It impacts almost every area of your life, and your estate plan is no different. While estate planning might not be high on your to-do list during the divorce process, you should still take some time to consider which documents need to be updated.

Divorce laws vary based on your state, but, overall, the legal principle is the same: it is the termination of the marital bond and restructuring or canceling of martial obligations. Both the pre- and post-divorce phases require action on your part when it comes to your estate plan.

Before the Divorce is Final

There are several documents you need to

update before the divorce is final. These include your living trust, living will, Power of Attorney, and will. You cannot assume that the completion of the divorce will immediately terminate your ex-spouse’s involvement in your estate plan. While that may be the case for the will, it’s not always so for the others.

  • Living trust. Your trust will be interpreted based on whether it is revocable or not. A trust that is revocable at the time of your death, provisions in the trust regarding your ex-spouse will be invalid. But, if your trust is irrevocable and you die with the trust still naming your ex-spouse as beneficiary, he or she is going to get all your things. The law cannot help you in this situation.
  • Living will. Your living will concerns healthcare directives and other related issues. If you fall ill and are incapacitated, who is your agent? If it is your ex-spouse, you may want to change that. If you feel comfortable with the person you’ve just divorced making critical life-or-death decisions about your medical care, then you should keep them as your agent. If not, make the change. It is not always clear whether a state’s laws will automatically excuse your ex-spouse from his or her duties in your living will.

 

  • Power of Attorney. Generally, depending on the state in which you live, if your spouse is your power of attorney and you divorce him or her, this grant of power will be revoked once the action for divorce is filed. However, the whole power of attorney is not revoked in its entirety. Your spouse may still be named as guardian, and that will not be revoked until the final decree.

 

  • Will. Depending on when you made your will, the final decree of divorce will generally revoke any provisions in the will concerning your ex-spouse. This only applies to your ex-spouse. Your ex-spouse’s kids are not kicked off the will, so if that’s something you want to do, you cannot count on the rule of law doing it for you.

Post-Divorce: What You Need to Do

So, you’ve made it, and the final decree has happened. Now what?

Well, in your estate plan, you will likely have some gaps to fill, including power of attorney, agent, beneficiaries, and other roles from which you have removed your ex-spouse. You will need to restructure and re-do your estate plan to make sure those critical positions are covered. Schedule an estate planning consultation today, regardless of whether you are pre- or post-divorce.

 

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Merry Christmakwanzakah: Everyone’s Included—Like Your Estate Plan Should Be

Posted by on Dec 21, 2017 in 529 Plan, estate planning, Trusts, Wills |

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.

The Toolkit

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.

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