Memorial Day, this year in 2022, takes place on Monday, May 30th. Almost all of us have a day off of work that day, and we use that time to reflect on the many men and woman of the Armed Forces who have given their lives to protect America and its citizens. The annual holiday is a somber one, and it is very important to understanding the core what makes America what it is today.
The fallen military personnel have left a legacy that will be remembered for years. In this article, we’ll talk about legacies and how they can apply to civilians’ daily lives.
Estate Planning and the Military
If you are a military member reading this, you should know that the Armed Forces provides quite a few estate planning services, up to and including the preparation of documents. Military attorneys can help you with functions like power of attorney (both limited and general), wills, healthcare decisions, and more. If you want to start your estate planning process or broaden your current estate plan, you need to talk to a lawyer specific to the military.
Tools to Leave a Legacy
Two-thirds of Americans do not have an estate plan, according to CNBC. This shocking fact means that the majority of the population are leaving decision-making up to the state in the event that they die or become incapacitated. The court system is not prepared to handle this many people, and it is important that that number is reduced.
To start, here are some basic documents that will help you protect your legacy in the event that you die:
- Will. This is a final expression of where you want your assets to go after you die. In a will, you can name beneficiaries who will receive your property after you have passed on. Though a will has to go through probate, it is a good start for most estate plans. Dying intestate without a will is very damaging to your family.
- Trust. A living trust does not need to go through the probate process, and it allows you to transfer title of your assets immediately to a trustee. At a time of your choosing, such as upon your death, the trustee will transfer the asset to the beneficiary. Like the will, this is another way to preserve your legacy by ensuring your heirs get your property when you die.
- Power of Attorney. This trusted individual makes decisions on your behalf when you are too sick to do so yourself. If incapacitated, it is important that you have someone who is able to take care of your financial and healthcare wellbeing in a responsible, effective way.
- Healthcare Directive. A “Do Not Resuscitate” command is a common one seen in a healthcare directive. This legal document lays out your end of life wishes, i.e. whether you want to be resuscitated or not and if you have any specific cultural or religious requests with regards to your healthcare. Even if you cannot verbalize the wishes because you are too sick, the healthcare directive will ensure doctors and nurses honor them.
- Guardianship. Your minor kids will need a guardian in the event something happens to you and your spouse, if applicable. Including guardianship papers in the estate plan by selecting a trusted individual who you know will take care of your kids’ day-to-day needs.
Dealing with Familial Disputes
There is no foolproof way to ward against familial disputes about your will or any of the other legal documents within your estate plan. If someone is disappointed, then they may try to challenge. That being said, there are some tips to keeping the process harmonious and challenge-free. Here are some ways to minimize familial disputes during the estate planning process:
- Hire a lawyer. A lawyer is the best way to ensure that your will is filled out correctly and in compliance with the law. He or she has also been around the block a few times and will know how to minimize family fights, as he or she has likely had quite a bit experience with estate planning tiffs.
- Talk to your family. This one might seem obvious, but it bears mentioning. If a family member is shocked in a bad way, he or she might react by challenging. But, if you keep everyone updated on what you plan to do with your estate plan, they will know ahead of time. They can air their grievances, and the communication will prevent anyone from being caught off-guard.
- Prove capacity. One of the most common ways that people challenge a will or trust is by claiming someone was not of sound mind. This means that the person allegedly was unable to make sound decisions and understand the effects of those decisions. If you think a challenge to your mental capacity is possible, talk to your lawyer. He or she may suggest you get a full medical workup to answer the question of mental capacity. This evaluation could prevent your relatives from making a challenge based on capacity.
Have a safe Memorial Day, and remember to contact an estate planning attorney if you have any questions about how to handle your legacy.
If you’ve ever had to engage with the probate system, then you know it can be capricious and difficult. However, having a baseline knowledge of what to expect from probate court will come in handy and make the process easier. In this article, we will discuss the “Frequently Asked Questions” about the topic of probate administration.
What is probate?
Let’s start with the basic question of what probate is. Probate, in very simple terms, is the legal procedure through which your “estate” (AKA, everything you own) goes through when you die. This legal proceeding entails the court distributing your estate to creditors and heirs.
What happens during probate?
Every probate is different in some way or another, but most follow a pretty concrete, step-by-step plan. Below are the steps of the probate process:
- An executor or lawyer submits a copy of your death certificate. This starts the probate process.
- Your will, if you have one, needs to be authenticated by the court. The court ensures it has been properly signed in compliance with the law. After the court approves the will, it is “valid.”
- The judge will then formally appoint someone (someone that you’ve probable named) as the executor. The executor will oversee the rest of the process and settle your estate.
- The executor will post your bond, if necessary, though that is not always required. Posting a bond will protect beneficiaries against any errors the executor makes during probate. Bonds can be pretty expensive.
- This is the biggest task: informing creditors and beneficiaries. They need to know that you have passed so they can collect inheritances (if applicable) and settle your debts.
- An assessment must be completed to determine the value of your estate. Everything you own when you died will be valued, and that number will be your estate’s value.
- Next, the executor will pay debts and fees from your estate.
- Remaining assets, if there are any, will be given to the correct beneficiaries. With this, the probate process will likely be considered over.
What must go through probate court?
Your will, obviously, has to go through probate court. If you do not have a will (i.e. if you die intestate), then everything you own goes through probate court. Regardless of what your will states, the following always goes through probate court:
- Any inheritance where your beneficiary died before you
- Non-titled property
- Sole-ownership property
- Partner-owned investment property
What does not have to go through probate court?
There are some assets that avoid probate court. If you plan it right with the help of an attorney, you can help avoid a lot of the probate process, should you have these assets:
- Items with a beneficiary named
- Items inside a living trust
- Payable on death (POD) items
- Transfer on death (TOD) items
- Jointly titled property with Survivor’s Rights
How much does probate cost?
The cost varies depending on where you live and how large the estate is. Court filing fees generally cost $300-$400. Attorneys’ fees vary between 3% and 5% of the value of the estate, but, again, that depends on the lawyer.
I’m confused. What now?
It is very understandable if you are confused by the probate process, and we have only scratched the surface of all there is to know about it. If you are confused, contact an estate planning attorney to help walk you through it. He or she will be able to guide you through this process (or avoid it), reducing stress on you and your family
Hopefully, this article has helped shed a little light on the often-complicated process of probate court. The grieving process is not easy on its own, and probate often makes things even more stressful, hence why getting a lawyer is a better idea than doing it alone.
Questions on probate? Contact WFP Law.
Mother’s Day is coming up soon, and the holiday, as with every year, is a chance to show the women in your lives how much you appreciate them. With Mother’s Day in mind, let’s look at some important estate planning tools that will benefit mothers especially.
When you’re estate planning, your first consideration should be your family. If you have kids, how will they be taken care of after you die? Will they receive your assets? Who will be their guardian? The conversation surrounding estate planning isn’t always easy. After all, it starts with the question of illness, incapacitation, and/or death. However difficult, it is still a conversation you have to have. And, if you haven’t started yet, do it as soon as possible.
As a mom, your kids are your number-one priority (sorry, spouses). Luckily, there are plenty of tools in estate planning that allow you to keep your kids safe, even after you die. The questions of what will happen to your assets and who will become any minor children’s guardian(s) are both paramount in estate planning.
There are many ways that assets can be transferred when you are estate planning. You want your kids to have what you have after you die, and you can accomplish that through tools like:
- A Trust. This three-party fiduciary relationship allows you to skip probate court when transferring your assets to your kids. A trust is relatively easy to set up, and there are many different kids. people might believe that trusts are only for the wealthy, but that couldn’t be further from the truth. These financial tools are useful for everyone.
- A Will. At the very least, you should have a will. The last will and testament is a final expression of what you want done with your assets after you die (i.e. transferred to your kids). Note, a will has to go through the probate process. Also, you do not want to “DIY” your will, as that can lead to a lot of expensive problems down the road. Always execute a will under the guidance of a qualified attorney.
FYI, it is not advised that you name kids as beneficiaries of your lie insurance, as that can turn into a legally complex situation. After all, minors cannot directly receive life insurance proceeds, and the state will have to appoint a legal guardian if you have not done so. This is a lengthy, costly process. You’re better off naming your spouse as a beneficiary, or, if you have grown kids, one of them.
If you have minor children, you will need to select a guardian for them. As mentioned, it can be a lengthy, costly process for the state to appoint a guardian, and they may not choose who you would choose. When drawing up guardianship paperwork, think carefully about who will best take care of your kids’ day-to-day needs. Talk with your proposed guardian before finalizing anything.
When estate planning, you also need to answer a few questions about what you want done if you are unable to communicate your wishes to doctors and nurses. Do you want to be resuscitated? Do you have any religious views that might require special care? Completing a healthcare directive will allow you to lay out these wishes in advance, making them valid even if you are too incapacitated to communicate them.
Additionally, appointing a trusted individual to serve as your power of attorney is also a wise option. This person can make decisions on your behalf, again if you’re too sick to do so yourself. Picking a P.O.A. will ensure that end-of-life decisions, both finance- and healthcare-related, are made by someone with your best interests at heart.
When you’re a mom, you have an enormous amount of responsibility. Don’t think of estate planning as adding to that burden. Instead, think of it as safeguarding you and your family for years to come. Meeting with the right attorney will make this process easier that attempting to do it alone. Contact WFP now: https://wfplaw.com
Trust funds aren’t just for the rich and famous, though they’re often what people think of when they think of wealth. Anyone can have a trust fund, as these estate planning tools provide a useful, efficient, safe way to transfer assets to heirs. In this article, we will go through the top ten trust fund FAQs and their answers.
1. What is a Trust Fund?
In short, a trust fund constitutes an independent legal entity. This entity holds property and assets (land, cash, etc.) for the benefit of a person or organization. Trust funds are often used in estate plans to hold businesses, property, investments, and, of course, money.
2. Who is a Trust Fund For?
A trust fund is for anyone you want to give assets to. Less than two percent of the American population has a trust fund, and the median amount in it is $285,000. This does not mean that people will less money cannot have a trust fund. If you want to transfer your assets to a beneficiary, that is enough to look into a trust fund.
3. What are the Benefits?
Trust funds have various tax benefits, and they can be an invaluable tool, giving you a lot of control over how your assets get distributed. They remain private, and they distribute cash over time. They cover assets that a will might not be able to, such as retirement plans and life insurance policies.
4. What are the Disadvantages?
If you choose a revocable trust, you’ll have more control, but the tax advantages, stamp duty, and estate tax will be far less beneficial. On the flip side, if the trust is irrevocable, you do not have control over the assets that you put into the trust.
5. How Do I Set One Up?
You’ll need an attorney to help you decide how you want to set your trust up. They will help you create the trust document, which will need to be signed and notarized, and set up your trust bank account. Then, you will transfer the assets into the trust and name your trustee and beneficiary.
6. How do Trust Funds Pay Out?
There are several different ways that a trust fund can pay out. They can pay in a lump sum or percentage, or the fund can make incremental payments over time. The distributions can even be made by the trustee’s assessments. Whatever you decide, you have to include this distribution method when you draw up the trust.
7. Who Controls the Trust?
The trustee controls the trust for the beneficiary’s benefit. Sometimes, people choose a bank, lawyer, or financial adviser to serve as trustee, as they know more about investments, money management, and taxes than the average family member. If you have a large trust or one with complicated assets in it, this corporate trustee might be a good idea.
8. What if I Change My Mind?
If the trust is revocable, as the name implies, you can alter it or revoke it at any time. The first step is to remove the assets in the trust. The procedure for trust revocation varies based on where you live.
9. Are These Funds Taxed?
Trust beneficiaries have to pay taxes on distributions from the trust. Taxes differ depending on the type of trust, however.
10. I’m Confused—What Now?
If you’re reading this guide and find yourself confused, don’t worry. Contact a financial adviser or attorney for questions on how to get this process started.
This short guide should set you on the right path to understanding what a trust fund is and how it can help your family. Contact a financial or estate planning attorney to learn more.
Easter is here, and, even if you don’t celebrate, you’ve probably heard the saying, “Don’t put your eggs all in one basket” before. This saying is used to caution people against putting all their effort, time, and money into one thing. For example, if you’re starting a business, you might hear that phrase as a way to warn you against relying too much on that endeavor as your sole source of income.
As estate planners, we believe that you can put all your eggs in one basket, as long as you protect the basket. Whether it’s building a new house, starting a new business, or getting married, going for broke is fine, as long as you have the necessary precautions in place.
Ways to Protect Your Business
Estate planning for businesses is a common theme in this legal field. Businesses are peoples’ prides and joys, and they want to ensure that the company is protected long after they are gone. Here are some estate planning tips for businesses that you may or may not have heard of:
- Basic Will/Estate Plan. You always want to start with this. You should have your own personal will and estate plan, including important documents like power of attorney(s), before you begin planning for your business. After all, you are the owner.
- Tax Efficiencies. If you hire an estate planning attorney, chances are, as long as that attorney is competent, you’re going to be able to legally save some money on your taxes. That’s another reason why business estate planning is so important—you can cut your tax burden down if you do it properly.
- Family-Owned Issues. If your business is family-owned, you will want to sort out any inheritance or takeover issues that are present before you draft the estate plan.
- Succession Plan. What do you want to happen to your business after you pass away? Drafting a succession plan, which should include all of the necessary information about your business and a detailed plan for what will happen when you’re gone, provides an outline for people to follow when determining the fate of your company. You can also draft a buy-sell agreement or a different document, depending on what you want to happen.
- Insurance. You should purchase life and disability insurance as a failsafe. That could provide you with the monetary resources you need to keep your company afloat if something happens to you.
When you get married, make sure you update your estate plan to include your new spouse as a beneficiary. If you and your spouse want children, the birth of these children will also require an estate plan update. The same goes for the end of the marriage—if the nuptials end badly, you’ll want to make sure your estate plan does not include your ex. When it comes to marriage, be prepared either way.
Estate Planning for Your Home
Your home is likely one of the most important things in your life. Estate planning can help minimize the tax burden on your home, and there are several different options for transfer, if you want to pass your home down. These options include (but are not limited to):
- Co-Ownership. You can put your heirs as your co-owners on the current deed, though this simplistic approach does not work for everyone.
- Will. Of course, you can also pass down your home using a will. Just note that this document will have to go through the probate process in order to effectuate the transfer.
- Trusts. Revocable trusts, as well as qualified personal residence trusts, are two options for passing your home down that do not require going through probate court.
- Transfer on Death. This “TOD” deed is not offered in Florida. But, if your family owns property in other states, this could be a quick, private option for home transfer.
- Selling. If there is no one who wants your home, you could sell it and rent a house later in your life, though there are a lot of factors (bills, health, lifestyle, taxes, ad maintenance) that factor into whether this option will work for you.
Essentially, you should follow your dreams, but you shouldn’t rush headlong into them without some sort of estate plan. Contact a WFP attorney to discuss ways to be daring and bold while also being reasonably cautious.
One of the biggest estate planning mistakes that people make is they forget to protect digital assets. Cryptocurrency and NFTs are becoming more and more popular and, though some coins are super-expensive, others are quite affordable. Crypto exchanges and the like have given people all over the world a chance to own coins with blockchain technology.
And, because these digital assets have value, they should be included in your estate plan. This article will consist of a brief overview about how to protect digital assets when estate-planning. As always, contact an estate planning attorney with experience in managing these digital assets if you have questions.
What Constitutes a Digital Asset?
Pretty much everyone owns a digital asset. Digital assets are personal property kept online or in the digital world. Technically, domain names, electronically-stored videos and photos, emails, and social media accounts are al digital assets. When it comes to estate planning, these digital assets matter.
But, in the context of today’s day and age, we’re referring to cryptocurrency and other personal property with value. Digital assets are just like real-life assets. You can inherit them, but, if your estate plan doesn’t provide for them properly, your heirs will not be able to access them. As people have more and more of a digital presence, digital asset estate planning is taking on a new importance for estate-holders of all ages.
Four Steps to Note
Obviously, everyone’s digital assets are different, so this “four step plan” is not a hard and fast rule. These steps are just ways to, in general, organize your digital estate plan. An attorney can help you with each. The steps are as follows:
1. Make a list. The first thing you want to do is actually name the digital assets you own. That way, your loved ones know where to find your assets. Possible assets include important passwords, social media and email accounts, and digital property like virtual currency, money transfer apps (Venmo, CashApp, etc.), and domain names. Store this list in a secure location when you have finished it. Make sure your family members know where it is and how to access it. You can even use apps like LastPass and 1Password, which help you manage your accounts, to help make this task easier.
2. Ensure you own the assets. You may have thought you purchased a digital asset, but double-check to make sure you didn’t just buy a nontransferable license to use the asset. For each of the digital assets on your list, make sure you can track down ownership documents to both ensure and prove that you are the true owner.
3. Back up cloud-stored data. FidSafe, a free, secure online safety deposit box, is one example of this extra layer of protection. If you have digital assets stored within the cloud, you should back them up onto a storage device or local computer. Do this regularly so that your fiduciaries and family members can access them without running into many obstacles.
4. Provide consent. This is where a qualified estate planning attorney, preferably one with experience with digital assets, comes in. Work with the lawyer to update your estate plan to give lawful consent for asset providers to divulge electronic communications to authorized people. Consider what information you want to be available, as a blanket authorization might not be appropriate.
Benefits of Digital Asset Estate Planning
When you create this estate plan, you’re ensuring that your digital assets are secured not only for your heirs, but also from hackers, fraudsters, and identity thieves. It is just as important a part of estate planning as anything else is. You can even set up different tools, such as a Digital Asset Protection Trust, which act similarly to other trusts. There are a lot of options for digital asset planning and protection out there.
Hopefully, this short guide has helped give you some insight into digital estate planning. As these assets become more and more common, it would not be surprising to see estate planning and digital assets turn into an even bigger topic than it already is. Get ahead of the curve and formulate your plan today. Call WFP and get the help you need.
Estate planning is best conducted with the assistance of an attorney, who can help you avoid pitfalls. Still, it is important to know what some of the most common estate planning mistakes are—that way, you can avoid them. Below is a list of ten commonly-seen estate planning errors.
1. Not Planning
To kick off this list, we’ll talk about one of the worst mistakes you can make: failing to create an estate plan at all. An estate plan offers protection for you after you die and while you are alive. Not only does it provide you with asset transfer after death, there are other important documents, such as a power of attorney and healthcare directive, that can be extremely valuable in an emergency.
2. Naming Only One Beneficiary
You always need more than one beneficiary for an asset. This is to safeguard the asset, as what happens if the beneficiary dies before you do? For each policy, account, and asset, you should have a contingent beneficiary that is next in line. Even more ideally, consider listing more one contingent beneficiary.
3. Forgetting Final Arrangements
Advance-planning what you want to happen for your burial arrangements and funeral is a blessing for people you leave behind. Make sure your wishes for end-of-life care, such as assisted living, hospice, and more are known beforehand as well. It will make things much easier for you relatives.
4. Not Including POAs
Powers of attorney are necessary protective tools in your estate plan. Commonly, they are seen for finance and healthcare. If you are too incapacitated to make your own financial and/or healthcare decisions, a power of attorney will do this for you. You appoint this trusted individual ahead of time to make these decisions, which will keep you safe even when you’re unwell.
5. What About Digital Assets?
Cryptocurrency has become more and more popular, and it is something people forget about when they make estate plans. Make sure these digital assets are included in your estate plan—including keys, passwords, and whatever else your executor needs in order to access them.
6. Not Discussing Ahead of Time
One way to minimize family drama is to discuss ahead of time what you’re planning to do with your estate plan. Keeping communication open will ensure that any questions are answered, and relatives who might feel as though the process is unfair or confusing will be able to talk to you about it for peace of mind. After all, it is your estate plan—don’t allow anyone to pressure you into making decisions with which you’re uncomfortable.
7. Being Overly-Specific
Being overly-specific is another pitfall that a lot of people run into. You might own assets at one time in your life that you don’t own in the future. Are the things you’re putting into your will things that you will definitely have, decades from now? Make sure that whatever you include has lasting potential and longevity.
8. Neglecting Taxes
Don’t forget—an estate plan can help you minimize your tax burden. Talk to an attorney about ways to minimize and eliminate inheritance and estate taxes (legally, of course).
9. Updating Infrequently
Update your estate plan every three to five years or whenever you experience a major life change (wedding, divorce, new baby, etc.). If you update too infrequently, you run the risk of leaving someone out by mistake or having an estate plan that doesn’t reflect your life situation and goals.
10. Improper Trust Funding
A trust is a great tool to have in an estate plan, but you have to make sure it is properly funded. Creating the trust is half the battle, the funding is the second part. With your attorney, discuss ways to ensure your trust is properly funded.
These common mistakes are easy to avoid if you have an attorney. Experienced attorneys will know the pitfalls of estate planning, and they can make sure that you’re being inclusive and sensible when it comes to your plan. Contact WFP today.
St. Patrick’s Day is coming up. Every March 17th, the holiday takes place around the world. Green beer, funky accessories, and a lot of partying and parades are the most common ways that people tip their hat to St. Patrick. Leprechauns might play tricks, but, when it comes to keeping family drama out of your estate plan, you’ll need no such thing.
It’s no secret that families fight, and will contests aren’t uncommon. However, with these tips and non-tricks, you’ll be able to avoid that unpleasantness. There’s no need to pull a leprechaun-esque trick on your family to keep them calm. All you need is efficiency, a good lawyer, and a solid plan.
What is a Will Contest?
Rules vary from state to state. In Florida, probate begins when the will is submitted to the local county court. The court used is the one where the individual resided at the time of death. After the will has been filed, creditors and beneficiaries must be notified. After they have been given notice, they have ninety dates to challenge the will.
There are a few grounds on which someone can contest a will: these include influence, coercion, fraud, and other legal grounds. To contest, someone files a petition in the court where the probate of the will is taking place. The petition requests that the court invalidate or revoke the will because of the stated legal grounds.
Who Usually Brings Will Contests?
Generally, it is a wronged family member who usually contests wills. Don’t get us wrong—fraud, coercion, and other valid legal grounds do exist, and, if there has been wrongdoing, it is important that it is stopped and sorted out. But, in situations where a will challenge is not quite so sincere, sometimes it is a family member who feels shorted or left out who mounts this petition.
Will Your Family Have This Drama?
You know your family better than we do. Maybe you have a son or daughter who feels entitled to something that they don’t deserve. Perhaps a relative thinks they should be your POA for finances, even though they have a reputation for overspending. Every family has its issues, and you can talk to your family about your estate plan to determine who could potentially challenge the will.
Tips for Avoiding Family Strife When Estate Planning
Though no steps are foolproof, there are ways to avoid family strife when you are estate-planning. These steps provide you with a good opportunity to keep the drama to a minimum, and it is the third of the three that is most important.
Create an Overview to Share
Keeping everyone in the dark certainly won’t help matters. You should create an overview document of your estate plan to offer your loved ones clarity. This document, which can include information on your assets and the different tools in your estate plan toolbox, will help your proposed executor understand your estate. The transparency can also help family members who may feel as though the inheritance process is unfair or confusing. Letting people know what you’re doing and your reasoning ensures there are no secrets.
Keeping the communication lines open will also be a great assist. Meet with family members who have a role in your estate plan and ensure that they know what is contained and how they will be impacted. It is also important to converse with people who you have left out (or, if you cannot do that for some reason, someone close to them). These conversations may be difficult to have, if not a bit awkward, but they will help you keep drama at bay.
Hire A Lawyer
One thing about estate planning attorneys is that this is not their first rodeo. They know that estate planning can be an emotional and complicated process, and they have likely seen this drama play out time and again. Hiring a lawyer will not only insure that the documents are legally-sound, but the attorney can also help you avoid common pitfalls, act as a sounding board, and even have some of those hard conversations with your family.
This article might have intimidated you, as it discusses a topic that a lot of us are uncomfortable with: family drama. However, it’s best to brave this issue head-on and not allow it to affect your estate plan. Call WFP today and schedule an appointment.
Every March 8th, people come together to celebrate International Women’s Day, which is a holiday that recognizes the achievements of women in history (and today). It has us thinking—how are you protecting the women in your life? Our mothers, grandmothers, sisters, and more deserve to have the best legal protection they can. One way you can show appreciation is to help them set up an estate plan. Below are just a few of the many ways that an estate plan can protect you.
Gives You Agency, Even After You Die
Though the question of what happens after death is a complicated one, estate plans provide at least one part of the answer. These plans are best-known for helping you determine where your assets will go after you die. With documents like will, trust, and more, you can decide what happens to your things after you die (or perhaps even sooner, if you choose a will).
The consequences of not having at least this mechanism in place can be dire. If someone dies intestate with no will, her estate will be divided up by probate court. Probate courts want to settle debt—assets that she might have wanted to go to family could be liquidated to pay off creditors, leaving the family entirely.
Can Minimize Taxes
As estate planning is about protecting loved ones, this includes keeping them from getting a huge tax bite from the IRS. When you estate-plan, you transfer assets to heirs, keeping in mind that you want to create the smallest-possible burden for them, as far as taxes go.
Even a small amount of estate planning can help you reduce much—or, if you’re lucky, even all—of their state and federal estate taxes, as well as their state inheritance taxes. There are ways to decrease tax beneficiaries’ income tax, and, without an estate plan in place, you could end up owing good ol’ Uncle Sam quite a bit.
Will Help Your Kids
We’ve talked about asset transfer and tax shielding, but, if your kids are young, an estate plan can help them in another way. While estate plans have a reputation for being all about the last will and testament, in reality, they are so much more. One document commonly seen in an estate plan is guardianship papers.
If you have young kids, use these documents to appoint a guardian for them in the event that something happens to you and your spouse. You can choose a trusted relative or close friend for this position, though you should make sure that you speak with them first before putting the paperwork in place.
Will Protect You, Even When Incapacitated
Most peoples’ worst nightmare is being so sick that they’re stuck in a hospital for days at a time, if not longer. Sadly, these situations happen, and, if you have an estate plan in place, you can keep your finances and healthcare decisions the same as if you were in tip-top shape.
Documents such as a healthcare directive and power of attorney will allow you to make decisions for yourself, either ahead of time or through a trusted proxy. These types of documents are especially important if you are ill already or suffer from preexisting health complications.
Helps Avoid Tricky Family Situations
Ah, families. They’re wonderful in so many ways, but every family has drama, at least to some extent. Some of that drama can spill over after you die. Estate plans stop fights before they can begin, as they let you pick who controls your finances (power of attorney) or who gets your things after you die. Though will challenges are not unheard of, an estate plan, when properly prepared, should be impervious to those.
An estate plan can offer great protection to people who need it. If this sounds like something you want for your female relatives, bring them in for a consultation with an estate planning attorney. This attorney can help guide them on what their estate plan should entail.
If you own a business, the last thing you want is for your hard work to be for naught. Have you given much thought to what you want to happen to your business when you die? Though it is a bit morbid, business succession planning is a must-do for any business owner. In this article, we will go through some of the most common, basic business succession planning FAQs.
- What is business succession planning?
Let’s start with a basic definition. Business succession planning is a series of both financial and logistical decisions about who you want to take over your business after you no longer run it. There are a lot of elements that go into a successful business succession plan, so it is best referred to as a conglomeration of important steps and documents.
- What are the common ways to transfer ownership?
Some common ways to transfer ownership of your business include selling your shares to a co-owner or key employee. You can also sell your interests back to your company or to an entrepreneur outside the business. If you want, you can even keep it in the family by passing ownership interest to your heir/family member.
- Do you have to die for the plan to be put in place?
Though we referenced death in the opening paragraph, you do not have to die for this plan to be put in place. You can retire or leave the company—all that matters is that you are no longer running the business.
- What is the first step?
The first step of many is to determine a timeline. When do you want the succession to take place? Will it take place on a specific date or if you are disabled or die? After that, you can begin the work of picking your successor, formalizing SOPs, getting your business valuation, and more.
- What are some issues that companies face when succession planning?
Deciding who to promote is often a huge issue when succession planning, along with maintaining the moral of the company. It is in your best interest to do a through evaluation of your proposed successor, as you want them to be someone who will keep company morale boosted.
- How do you decide who to promote, if you go that route?
In reality, that decision is best left up to you. You should contact other people to see what they think, and our best advice is to just consider the issue really carefully. Determining leadership skills is not an easy task, and that is why this step of succession planning is often difficult for companies.
- What should the plan include?
Each business succession plan is tailored to the particular company, but some major documents in the plan usually include a timeline, list of potential successors, Standard Operating Procedures (formalized), a valuation of your company, and details about how your succession will be funded.
- Should other people weigh in?
It can be hard to know who to talk to during a succession. If you have people you rely on, don’t be afraid to ask them what they think. It is a weighty task to set up this sort of plan, and you don’t want to go it alone. Whether you tell your potential successor or not is up to you. Use your best judgment—if in doubt, hold off telling them until it is time.
- Can I change the plan?
Double-check with your lawyer just to make sure, but your succession plan can usually be updated, should you change your mind or have circumstances change.
- I’m confused. What do I do?
This process can be confusing, and if you’re struggling, contact an attorney. They are best-suited to give you third-party legal advice and insight.
Listed above are just some of the pertinent questions that business owners face when they are coming up with a succession plan. Above all, the most important step is number ten. Don’t be afraid to ask for help. Contacting an attorney will help shed light on the process, making it easier to maneuver.