Valentine’s Day is the season of cards, flowers, roses, and chocolate. This romantic holiday has been around for centuries, ever since 496 A.D. Back then, the Romans hosted the holiday, which they called Lupercalia. Lupercalia was celebrated as the beginning of springtime, but, over the years, it has been changed both in name and in purpose. 

Valentine’s Day is all about showing love. While cards and chocolate are nice gifts, they are somewhat fleeting. If you want a gift that will last, consider how you can use estate planning to achieve that goal. 

Your Spouse (Or Spouse-to-Be)

Your Estate 

If you are married, about to be married, or are in a civil union, estate planning is important to ensure that your spouse has some protection in the event that you die or fall ill. Even if you and your partner are not married, failure to plan will cause you to have issues with inheritance and end-of-life medical care. 

A typical estate planning tool that can provide for a spouse/long-term partner after your death is a revocable trust. A revocable trust arrangement can take many forms, but the most common is the continual income trust. This legal document is devised by the grantee (you) for the grantor’s (your spouse’s) remaining life. Your estate will pay out a distribution to your spouse after you die for the rest of their life. Other grantors can include your children, grandchildren, or other relatives. 

An example of this is Frances Bean Cobain, the daughter of Nirvana frontman Kurt Cobain. After her father’s tragic death, Frances Bean Cobain revealed that Cobain left a huge chunk of his estate. She gets over $100,000 per month from his estate to this day.

Medical Care

Another important aspect of this type of planning for spouses/partners is end-of-life medical care. If you make your spouse your power of attorney, that will allow him or her to have a say in your financial and medical decisions when you are unable to make them for yourself. Assumedly, you trust your spouse and find them responsible. Giving the person closest to you control over such important, personal decisions is an important aspect of an estate plan. This works both ways. 

Your Kids

If something were to happen to you and your spouse, who would you want to take care of your children? Part of your estate plan should involve your kids. This includes not only estate distributions, such as in the case of Kurt Cobain’s daughter, but also guardianship. Guardianship refers to the person who will take care of your kids until they reach the age of majority (18).

Discuss these plans with your proposed guardian to make sure they are on board and consider themselves fit to assume the role of guardian, should anything happen. Most common choices include grandparents and aunts and uncles. 

Your Parents/Grandparents 

This one applies to those of us who have aging parents. If your parents or grandparents have not put together an estate plan, it is important that they do so. For example, if you know your elderly relatives have very specific medical wishes (such as a DNR), they should include those in an estate plan. That way, the hospital and end-of-life caregivers will honor these wishes even when your elderly relatives cannot communicate them.

Other Loved Ones 

Estate plans can include anyone. If you have assets that you want to leave to specific relatives, that is something that estate planning can handle. If you don’t make these arrangements before death, your chosen relatives might not get what you want them to. Instead, your assets will be divvied up and sold off by probate court.

As you can see, there is more than one way to show your loved ones how much you care about them. Estate planning provides a useful way to give a gift that will last long after you’re gone. 

I think we can all agree that one of the highlights of paying taxes (since we all have to pay them) is seeing how much we can avoid having to pay. In this article, we’ll talk about how to make the most of exemptions for which you might qualify. Don’t forget—tax day is April 15th, and you should start working on your taxes now to avoid possible penalties for lateness or inaccuracy. 

What is a Tax Exemption? 

Getting the vocabulary correct is essential to accurate taxes. A tax exemption is the removal of a liability to pay. A tax exemption reduces or removes a compulsory payment that you (or your estate) would have to pay. Tax-exempt status, as it’s known, can provide complete or partial relief from taxes. An example of an entity with tax-exempt status is a church. 

What is a Tax Deduction? 

A tax deduction is a little different. This income is the result of expenses you incur, usually for a business. A tax deduction reduces your income, and they are a form of tax incentive. Exemptions and credits are the other two tax incentives available. 

What is a Tax Credit? 

Thirdly, a tax credit is a tax incentive that allows taxpayers to reduce the payment they owe to the IRS. They subtract the amount of the credit accrued from the total payment owed to the IRS. This credit can be granted as a form of state support or as a recognition of taxes that you have already paid. 

Each of these incentives is unique in their own way, but the bottom line is the same. These incentives allow you to pay less money to the government, if you know how to take advantage of them.

Standard v. Itemized Deductions

With standard and itemized deductions, you pick one or the other. A standard deduction is a flat dollar amount that you can subtract from your income before the income tax is levied. The standard deduction changes based on your filing status (Married, Single, etc.). For example, in 2019, people who were filing as Head of Household over the age of 65 in 2019 could take a standard deduction of $1,650. 

Itemized deductions, by contrast, require their own form. These are eligible expenses that you can claim on your tax form. These expenses are deducted from your final, taxable income. They decrease your taxable income, and you can claim itemized deductions if you are not taking the standard deduction. Making the decision as to which to take—itemized or standard—is easy. Pick the one that saves you the most money. If your standard deduction would be (for example) $2,000 and your itemized deduction $1,850, take the standard deduction.

Most Overlooked Itemized Deductions 

Should you choose itemized deductions, make sure that you aren’t overlooking some common ones. The most commonly-itemized deductions include charitable payments, medical expenses, dental expenses, home mortgage points, work-related education expenses, state/local income tax, sales/property tax, personal casualty losses, business use of your home, and more. All of these have their own caps and requirements to take them. 

Note that several deductions will be unavailable through 2025. The IRS took them off the list in 2018, and they will remain that way for five more years. Items like home equity lines of credit, loans, alimony, moving expenses, certain types of casualty losses, and other miscellaneous deductions are not available. 

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

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

Divorce

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

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

Other Peoples’ Divorces

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

A Death in The Family 

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

Estrangement 

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

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

Sickness 

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

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