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.
When you think of estate planning, you might picture in your head a last will and testament from someone who’s ninety years old. That, however, is not the case at all (though certainly that is a common document and age range). Estate planning is a young man’s game too, and college kids need a power of attorney the same way someone five decades their senior does.
You should encourage the college-age kids in your life to get a power of attorney. In this article, we’ll discuss what a power of attorney is, as well as why college-age people should have one.
What is a Power of Attorney?
If you become unable to manage your own affairs due to incapacitation (illness, injury, mental incompetence, etc.), a power of attorney is the person you legally appoint to manage your affairs in your place. Even if you have absolutely no problems on the horizon and are in perfect health, you still should have a power of attorney. There are a few different types of power of attorney. These include general, special, and healthcare. You should also know the term “durable power of attorney.”
General power of attorney gives a person broad authority to act on your behalf for a wide range of different issues. This type of POA is included in an estate plan most often. The special power of attorney is narrower in scope, and you assign to the special POA only those powers you wish them to have. A healthcare POA makes healthcare decisions for you if you’re too sick or injured to make them.
Lastly, a durable POA is just a document ensuring that there won’t be any issues in keeping the authority of the general, special, or healthcare power of attorney intact in the event that you’re too incapacitated to make your own decisions. The durable power of attorney can also go into effect if you’re mentally incompetent to handle decision-making, and you can choose the doctor(s) you want to determine your competency to lift the POA.
Why do college kids need one?
Estate planning is based on the fact that no one is infallible. It is the best way to prepare for the “what ifs” in life, and college kids are still vulnerable to different types of illnesses and injuries. They certainly aren’t injury- and sickness-proof while they’re away from home. Having a college-age kid sign a power of attorney ensures that kid’s parents will be able to manage their affairs, should the kids become unable to do so. As the kids are 18 and no longer minors, they can pick any adult they trust, related or unrelated. College kids don’t have many assets, but they do have bills, a bank account, and digital accounts that need to be managed if something happens.
Kids who are in college rarely think anything can happen to them, but, unfortunately, that isn’t always the case. It’s important to be prepared, and having a power of attorney is a necessity for anyone who is no longer a minor.
Father’s Day has just passed, and you’ve probably either given or received some pretty great gifts. If you’re a dad, or someone related to a dad, you should know that the spirit of celebration doesn’t have to end just because the holiday is over. There is still a great gift you can give someone in your life, whether you’re giving the gift as a father or to a father. This is the gift of estate planning. Estate planning is the process of arranging and assigning the way in which your assets and debts will be distributed after you pass on.
Without an estate plan, your family could be looking at some time (and money) spent in probate court trying to figure out what to do. To spare them that tediousness, below are some common estate planning documents you should know.
A 529 plan is a tax plan that allows you to set aside some of your assets for the kids in your family who will be going to college. This plan is also called a “qualified tuition plan.” The qualified tuition plan can be sponsored by states, state agencies, or state institutions, and it comes with tax advantages. The 529 plan can operate as a savings account designed to accrue federal and state tax benefits (income tax breaks, low maintenance, simple reporting, control of the account, and more). The impact on financial aid is minimal.
As an alternative to a savings plan, you can have a prepaid plan, which will pre-pay tuition for colleges, either in full or in part. These 529 plans are generally fine to use for out-of-state colleges, but you should check with your estate planner to ensure that they are usable.
A living trust is different from a last will and testament. The living trust has three parties: (1) you, the donor, (2) the trustee, and (3) your beneficiary. You give nominal title to the trustee, who passes the title of the asset to the beneficiary after you pass away (or whenever you decide you want your beneficiary to have it). You don’t have to go through probate court with a living trust the way you do with a last will, as a living trust goes into effect immediately. Depending on the trust, it can be revocable or irrevocable.
Naturally, a Father’s Day post couldn’t go by without mentioning the kids who have made you a father. An important part of estate planning for those with minor children is deciding who will have guardianship of them in the event that something happens to you. Keep the guardianship plan updated if there are any changes (for example, if the person you would have chosen can no longer take the kids, make sure you immediately change your estate plan to reflect that). Having someone you trust as a guardian will give you peace of mind and benefit your kids immensely should something happen.
These are just some of the many documents that go into estate planning, and there are tons of other tools in the toolbox that will be right for your particular financial situation. Consult with an estate planner today to keep the Father’s Day gift-giving going.
Most of us have probably had a sunburn. Those of us with easily-sunburned skin know the stinging pain that comes along with it. Though our beach day might have been fun, the aftermath was not quite so nice. However, sunburns aren’t the only thing that can cause a major sting. Think of probate court as the judicial equivalent of a sunburn: annoying, uncomfortable, and definitely not what you want to be dealing with. Here’s a brief overview of what probate is, how you get there, and how you can avoid it.
Probate court is a court that deals with the division of your assets and repayment of your debts after you die. It handles validation of a will, identifying and taking an inventory of the deceased person’s property, and dividing said property up according to state law (after debt repayment, of course). State by state, the process of probate court varies, but here are some elements of the process that you need to know, and they don’t vary a whole lot across-the-board.
First, you should know about the executor. This person can be named in your will. Or, a judge can appoint him or her if you die intestate or fail to name the person. The executor has a lot to handle. He or she validates your will, presents a judge with an inventory of property and debts, and gives a list of who should inherit the property and assets that you’ll have left after the debts are wiped out.
The executor notifies your creditors and family members of your death so that people can make requests. The executor has to decide what to do if you come up short. If you’ve granted cash gifts that you don’t have when you die, the executor might decide to sell some of your property in order to make ends meet. This is just one example of the way in which the executor will work with the court to settle up your property. This process usually takes a year or two, but it can take even more, depending on your circumstance and the court’s schedule. Overall, probate is a long, arduous ordeal.
How Do I Wind Up There?
If you die intestate (which means being deceased without a will), you’ll end up in probate. People might be under the impression that you can avoid probate if you have a last will and testament, but that actually isn’t true. The executor still has to go to court and validate the will. A will must be authenticated. Otherwise, it isn’t going to hold up in court. Lawyers will assist in the validation process, as it varies based on state law.
Having an estate plan that doesn’t address important documents recommended if you want to avoid probate is a way that you wind up there. Especially when it comes to the appointment of your executor, your family will not like the process at all. If the judge appoints someone you didn’t intend to manage your affairs, things will go likely downhill rapidly.
Yikes! How Can I Avoid That?
Avoiding probate court involves some legal footwork, such as establishing a living trust. This legal tool is a three-party fiduciary relationship that is effective immediately. You, the donor, give nominal title to the trustee, who then confers the title to your beneficiary when you designate them to do so (i.e. after you die, usually). Joint tenancy arrangements are also not subject to probate, depending on state law. Your estate planning attorney will help you work out ways to keep your family out of probate.
When it comes to this judicial sunburn, you want to take all the necessary precautions. Consider a living trust (as well as smart estate planning overall) your equivalent of SPF 50 sunscreen. Good estate planning and consulting with an estate planner will save your family time, energy, and stress. A sunburn might last just a week or so, but the sting of probate lasts way, way longer.
Everyone’s mom has, at some point or another, given them advice that has been extremely important, whether they realized that at the time or not. Moms really do give the best guidance, and they also are really great at making sure everyone is prepared, whether it’s making school lunches, helping get homework done, getting everyone on the bus in time, or doing one of the other million things that superwoman moms do. Not only do your mom’s lessons apply during your childhood, they are also relevant when it comes to your adult life.
There’s no better way to be prepared than to have an estate plan. The consequences if you don’t one will be far worse than they would be for forgetting your homework or missing the bus. Now that you’re an adult, being prepared takes on a whole new meaning, and planning your estate is something you should take very seriously.
What is Estate Planning?
Estate planning is pretty easy to understand as a concept. It involves creating a plan for what will happen to your assets after you pass on. You can have these assets transferred to loved ones, donated, or dispersed however you want. Here are some great ways you can use estate planning to help plan in advance for you and your loved ones’ future:
- Healthcare directives. If you’re ever in the hospital and are too incapacitated to tell the doctors what you want, you’ll need to make sure that you have a plan. Otherwise, you might not receive the medical care you desire. A healthcare directive is a series of instructions from you to the doctors, nurses, and hospital on how to take care of you in the event that you’re too sick to tell them yourself.
- Power of attorney. Your power of attorney also takes care of you when you are incapacitated or unable to make decisions for yourself. How it works is simple; you pick someone you trust and they will be in charge of your financial decisions if you cannot make them. By selecting the person yourself, you ensure that you won’t be giving financial information to someone who might misuse it.
- 529 Plans. If you have a loved one that will be getting ready to go to college, you should invest in a 529 plan. This plan allows you to set aside funds for the child’s college fund. These assets will be transferred at the time of your choosing.
- Living trust. This is a three-party relationship of a fiduciary nature. You, the donor, transfer nominal title to the transferee, who is the trustee. The trustee then, on your instruction, will transfer title to the beneficiary, who is the person you want to receive your assets in the end. A living trust goes into effect immediately and allows you to avoid probate court.
These tools are just some of the many that will help you be prepared in case you pass away. Your estate, if you don’t have a plan, will end up in the grasp of probate court, which is very costly.
Probate Court Explained
Probate court is what happens when you forget your homework, so to speak. In probate court, if you’re there, it is because you forgot to make an estate plan, or you don’t have the documents in the plan that would allow you get out of it. In probate, your assets are divided up by a judge who first eliminates debts and then divides what’s left evenly. It’s unlikely that your property and debts will be divided up the way you want them to be, and your family will not be happy with the increased cost and time that probate court takes.
Mother knows best, and you can take heed of her instructions even in your adult life by being prepared and consulting an estate planning attorney.
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.
May the Fourth be with you! May 4th has quickly become a tradition for die-hard Star Wars fans across the globe, who come together to celebrate what they love most about the popular movies. However, Star Wars’ themes aren’t just relative to space alone. When it comes to your family, you’re going to want to prevent some battles of your own—albeit not the intergalactic kind.
Estate planning ensures that your assets and debts are assigned in a way that is best for your family. This will keep family harmony, and no one will have to go through probate court. Through estate planning, you will keep the peace in your family by avoiding probate court (which, for symbolic purposes, you can think of as the Death Star of the legal world). Probate court leads to nothing but trouble, and to avoid estate wars within your family, there are some things you must do.
Why is Probate Court So Bad?
Okay, so probate court might not be totally as serious as a planet-destroying star, but it definitely is not where you want your family to be. People who die intestate (meaning they die without a will) or people who die with a last will and testament have to go through probate court. During probate, your estate—assets and debts—are divvied out by a judge.
A family member is appointed to be the executor of your estate. Debts are paid off first; that is goal number one of probate court. Then, whatever’s left is divided among the eligible recipients. The process is long and drawn out, and there is not a great likelihood that you will see your assets go where you want them to. The debts also may be assigned in ways that greatly disadvantage those selected to pay them off. All in all, probate court is not the answer for your family.
How to Avoid It
A common misconception is that having a last will and testament will automatically get you out of probate court and tie up your affairs nicely. That’s not true, however. A last will still has to go through probate court, and it will still take a long time.
The alternative to that is a living trust. With a living trust, there are three parties: you, the trustee, and the beneficiary. You, as the donor, confer nominal ownership of assets to the trustee, who, at a date you give them, hands over your assets to your chosen beneficiary. This gets you out of probate court and puts your estate immediately into the hands of the people you want to get it. There is no middleman, and your beneficiary will be grateful to you for that.
Probate court serves its purpose, but it is not a place that families want to go. Between the time consuming court trips, the costs, and the overall drudgery of this legal process, planning your estate in order to avoid these problems is a far better alternative than risking “estate wars.”
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.