ESTATE PLANNING UPDATES: NOT JUST “SET IT AND FORGET IT”

Over 70 percent of all Americans have no estate planning documents whatsoever. Of the 30 percent that do, most have only basic documents like a Last Will and Testament, with no regard to probate avoidance, estate tax reduction or asset protection. Of those people that do incorporate a Revocable Living Trust into their foundational estate plan, over 90 percent will leave the trust underfunded or unfunded at death, causing the unnecessary loss of assets and unnecessary delay of distribution. Some basic estate planning upkeep could alleviate all of these concerns.

Your estate plan should be reviewed with an attorney at least once every 3 to 5 years. I review my clients’ estate plans each year to determine if any changes need to be made due to a change in tax law (as happened in 2010), legal drafting requirements (as happened in 2005) or the Probate Code (as happens most years). However, the more pressing changes almost always occur on the personal side of the equation.

Over the course of every 5 year period, most families will see a birth, a death, a marriage or a divorce and this event could cause the need for an amendment to the estate plans of the individual members of that family. Additionally, the beneficiaries might be at different ages or competency levels and the Trustees, Personal Representatives and Guardians might be in different stages in life, areas of the country or financial levels than they were when you originally drafted your plan, which would cause the immediate need to revise and choose new role players.

Another consideration is the age of your attorney. Your estate planning attorney needs to be able to walk your children or other beneficiaries through the administration process. Is your attorney still alive? Is he still practicing? Will he still be practicing when you die? Does he practice in the state in which you currently live?

Any estate planning attorney should give you a free consultation for the review of your estate plan. An ounce of prevention is worth a pound of cure. A simple review and possible amendment to your estate plan today will save your family large amounts of money and time after you are gone

THE NEED FOR A PROPER BUSINESS STRUCTURE

There are a variety of business entities that can be incorporated into your wealth preservation plan. A Limited Liability Company (LLC) is a commonly used structure that provides its “members” (owners) with control over assets, without the risks associated with having title in their own personal names.

By owning your assets in an LLC, you are safeguarding them from being pulled into a lawsuit brought against you, as you do not “own” them. The LLC provides higher liability protection than a corporation and, if organized correctly, any potential creditor or litigant would be limited to gaining only a charging lien against the LLC. Your home and other assets (bank account, etc.) may not be touched, because you do not own the business directly, thus you are not personally liable. It’s like being a stockholder in a corporation.

Due to the fact that there are several requirements to properly forming an LLC, you will want to seek an attorney (that has a thorough understanding of such asset protection) to assist you in ensuring that the LLC is valid; otherwise, your safeguarding efforts will be futile. Also, keep in mind, the timing of the asset transfer cannot be done to actively avoid a present creditor, as it may be considered a “fraudulent conveyance.” Therefore, it is important to partake in these asset protection strategies prior to any legal or financial problems.

By utilizing estate-planning techniques, you can protect yourself and your family from unnecessary hassles, while safeguarding your assets. With the help of an estate-planning attorney, there are a variety of tools that can be customized to your goals, and implemented to ensure that you get to enjoy your assets and investments without that pesky law suit target that comes when you own them in your own name.

TAX DAY BE DAMNED: GIVE OR IT SHALL BE TAKEN

Tax day just passed and you may have made a commitment that you will make better tax decisions for 2016; just like you promised for 2015. The time has come to introduce this resolution to your inner humanitarian, as you can make donations to a good cause, while reducing your tax liability. This year, be sure to find an organization that is qualified by the IRS, so you can make an itemized deduction on your tax return. Use the following tips to ensure that you can receive a deduction for your charitable donation.

1. Itemized Deduction: First of all, you cannot make a qualified charitable deduction under the “standard deduction,” as they can only be reported through itemized deductions.

2. Determine whether your donation is qualified for a deduction: To receive a deduction for your donation, it must be made to a “qualified organization.” The “Exempt Organizations Select Check” is an online tool provided by the IRS to help you determine whether your donation was made to a qualified organization. If you don’t want to do the research, you can always count on larger charitable organizations like Red Cross.

3. Keep a record: When you make a charitable donation to a qualified organization, you must maintain a record in the form of a bank record or a written communication from the qualified organization containing name of the organization, the date and amount of the contribution. If your contribution has a value of $250 or more, you must get a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash, a description of any property contributed, and whether your received a benefit in return (if so, it must include the estimated value of the benefit received).

4. Submit a Form 8283: If your charitable donation deductions exceed $500, you must submit a Form 8283 with your return. It’s a Wild World, are you protected?

Thanks to the cautiousness that was brought on April Fool’s Day, we are more careful to decide what we take as fact and fiction. The same goes for estate planning: you want to dispel all those false truths, and learn the truth.

False: Estate Planning and Wealth Preservation Techniques are only for Millionaires.

If you are not bringing in at least eight figures, you simply have no possible use for a wealth preservation plan, right? Wrong. If you have anything to lose, it is worth protecting. In fact, if you have air in your lungs, you will benefit from standard health related estate planning documents. A wealth preservation plan can ensure that what large or little amount of wealth that you do have, is preserved in both life and death. Wealth preservation is not just about concerns associated with extreme wealth; but also with the human element. You have a legacy, and the property and relationships that you acquire throughout your life warrant protection. Furthermore, such techniques allow you to maintain control in situations where you would ordinarily have none.

False: Estate Planning is strictly for senior citizens.

If you still have to pay $12 at the movie theater, in stead of the discounted $8 reserved for senior citizens, you are not precluded from the benefits of an estate plan. In fact, the earlier you start planning, the better. Creating a cohesive estate plan earlier in life provides many benefits over those initiated later down the road; especially when it comes to shielding your assets from the claims of creditors. Florida has adopted the Uniform Fraudulent Transfer Act, meaning you cannot transfer your assets to intentionally avoid a creditor. Timing is among the many factors that the court will look at, as well as the purpose for your transfers. If you protect your property on the onset, for the purpose of achieving standard estate planning benefits, you will be effectively protecting your property from the claims of others. Furthermore, there are many strategies that are used to insulate income from unnecessary taxes; as a result, their benefits accrue through time.

False: Estate Plans are like the energizer bunny, they last forever.

While, technically, estate plans do last forever, the problem is that they may not “keep going & going” effectively. There are a variety of life events that warrant a reevaluation of your estate plan, especially those regarding relationships and property. Divorce and remarriage require alterations within your documents to ensure that your properties, and appointed persons, are in unison with your wishes. Changes in your wealth and property should also merit a second look at your documents, and whether they parallel with your goals. Thus, it is incredibly important to have your attorney look over your estate planning documents, following any significant changes in relationships or wealth.