The Redcoats are coming! And they’re coming for all you own, too. That scary pronouncement refers to something called “probate court,” which may not sound intimidating on its face, but is actually quite scary in and of itself. Probate court and the IRS go hand in hand, and if you want to avoid your estate getting snatched up, you should consult an estate planner immediately.

In this article, we’ll tell you how to remain Redcoat-free through an estate plan that keeps your assets and your family out of probate court. First, though, you might be wondering: what’s so scary about probate?

Probate Court 101

If you die without giving instructions on how you want your assets distributed after your death, your estate will go to probate court. This court manages peoples’ debts and property after they pass away. The court is state, not federal, as the state is considered the system best in position to manage its own citizens’ affairs.

But in this case, is it? The evidence would say that the person in the best position to manage your affairs is you. Probate court has two goals: pay off your debts and distribute what’s left. After someone files a petition for probate, the probate court appoints an administrator or executor to execute the process. There are a lot of fees associated with this process, ranging from administrative to legal fees, and all of your business becomes public record. The distribution of your assets is not the only thing that the public gets to know: the nature and extent of your debts are also on the record. Your financial situation becomes common knowledge. The process can take six months if you’re lucky. Often, it can take more than a year.

And, of course, you can’t forget about the taxes.

When the IRS Comes to Visit

The IRS wants its cut. Taxes are nothing new any law-abiding citizen, but it’s a pretty common assumption that, if there is a tax loophole, you want to take advantage of it.

When you’re in probate court, the chance to avoid taxes goes out the window. There is a tax on the value of your probate estate. This is called an estate tax, though it is sometimes known as an inheritance tax. In some states, if your estate is over a certain value, that is when the tax is triggered.

Through financial planning, you can often lessen your tax burden to some degree. Gifting money, putting your assets in a trust, and taking advantage of exemptions are just some of the ways to avoid getting hit with a huge bill. If you just go straight to probate with no plan, however, your estate is going to be taxed as is, and your loved ones will merely get what’s left.

How to Avoid This

As mentioned above, placing your assets in a living trust is a very, very beneficial option if you want to stay out of probate.  A common misconception is that a last will and testament will keep you out of court—it won’t. The will still must go to probate to be executed by the court. The process is still time-consuming and costly.

A living trust is a fiduciary relationship that puts your possessions in a trust. When you die, your assets are given by the trustee to your beneficiaries, who you designate. This tool allows you to avoid probate and your beneficiaries to receive their assets immediately. Consult an estate planner to discuss this option and many others that will protect your property.

Tax season, happily, is ending soon, and if you haven’t used your exemptions, you should probably do so now. Tax returns are due April 17, while filing began on January 29, which means that the American people have had four months to either procrastinate on their taxes (or get them done).
If you haven’t used your tax exemptions, do it now, particularly when it comes to the estate tax and gift tax. The estate and gift tax exemptions work together, so it makes sense, in this article, to talk about them together with estate planning in mind.

The Estate Tax Exemption
An estate tax is a tax levied on a deceased person’s estate based on the estate’s net value. On an estate, there are two types of taxes that you need to be aware of: one on the income generated from the estate’s assets and another on the transfer of assets to the beneficiaries of the estate.
The estate tax exemption has been raised to $11 million per individual, which equals $22 million for a married couple electing portability. Before 2018, the estate tax exemption was maybe half of what the individual person could get. So, if you fall within this exclusionary amount, you can dodge the estate tax altogether.
Similarly, the gift tax has undergone some changes in 2018.

The Gift Tax Exemption
The gift tax exemption (also known as the gift tax exclusion) has increased in 2018. Before 2018, the limit was $14,000. But now, in 2018, the limit is $15,000. For married couples who split their gifts, the limit ends up being $30,000.
This gift tax exemption is especially valuable for families who are gifting money to help pay for college education. There is a special type of plan for gift money that is used to pay for college: the § 529 plan. A 529 plan allows you to gift five times the gift tax exemption limit in a single year and still be covered by the exclusion. So, if you were to give a gift of $75,000, you would not be taxed on it because it would be considered five gifts of $15,000. Were the limit still $14,000, the 529 would exempt $5,000 less.
The gift tax and estate tax exemptions have both gone up, and the increase in these exemptions will benefit the savvy filer who knows how to use them.

How the Two Work Together
Known as the “unified tax,” the gift and estate tax are the same rate and applied in the same way. The gift tax occurs when you’re alive, and the estate tax comes when you are dead. You can gift during your lifetime in order to avoid paying estate taxes when you are deceased. If you give gifts throughout your life and meet the exemption, you can reduce the amount of taxes that you will have to pay on your estate.
The other benefit to this idea of “gifting while you live to save on taxes when you die” is that even if you are taxed on your gifts, you have the option of paying those, because you’ll be alive. The estate tax will just take out a chunk of what your beneficiary will inherit.
Use it or lose it! Tax season is coming to an end, and if you are able to claim either of these exemptions, you should.

         Pretty much everyone has heard of Bitcoin, but, for the few who haven’t, Bitcoin is a digital currency that, in order to get, you have to “mine.” You mine Bitcoin by running software that finds the key to open the digital Bitcoin lockbox, so to speak. When your software finds the key, you get twenty-five Bitcoins. This unusual process isn’t the only way to get the coins, however; you can also trade them for fiat (domestic) currency.

Bitcoin is super volatile, but it can be very profitable given the right circumstances. Its price can soar or drop, making it one of the more exciting assets out there. If you’re a Bitcoin investor, first of all, congratulations on being brave. Second, if you consider Bitcoin a part of your assets that you want to hang on to, you can protect them through estate planning.

Bitcoin in Your Estate Plan?

You’ve mined your gold and now want to protect it. Luckily, estate planning is a field that has kept up with this technological advancement, and you are able to protect your Bitcoin the way you would any other, more conventional, asset.

People tend to talk about Bitcoin’s price, not about what you do with it after you die. You store Bitcoin on a computer, whether in cold vault storage, a digital wallet, USB port, or some other digital means. This makes it different than, say, real property, which is held in the corporeal world.

Bitcoin does differ when it comes to trading, as you’re not asked to name a beneficiary when you buy or sell through an exchange, a practice that is common when trading other assets. The anonymity of Bitcoin (no identification required to buy or sell) is another problem, as there’s no information attached to this form of property. Your Bitcoin is just floating around in the computer world, and it needs to be tethered down somehow.

To make sure you’ve got your gold protected, you need to update your documents to include your digital currency, what you want done with it after you die (buy, sell, keep, etc.), and how to access it. If you don’t, this property will end up in probate court, where a judge will distribute it.

Things to Consider

One of the most important things to consider is making sure that your beneficiaries have the ability to access your bitcoin. Give them the private key, password, and whatever else they need to get to your bitcoin. List the different digital holdings you have and how to electronically get to them. If you have your currency locked up and die without giving people instructions on accessing it, it will be gone forever.

Secondly, make sure your beneficiary understands how to manage Bitcoin. Bitcoin, as stated above, is volatile, with tons of swings in price. It’s not for the faint of heart. You can lose or gain a lot of money, depending on what the market decides to do (true, that’s common with many assets, but it’s more pronounced with Bitcoin). Ensure that your beneficiary knows how to handle this currency, and leave them detailed instructions.

Bitcoin is an exciting new currency, and, like any other asset, it needs to be protected and maintained via documents in your estate plan. Consult an attorney today to find out how to best manage your Bitcoin.

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.

You’ve probably, at some point or another, seen those ads that offer DIY-legal services. These ads claim that, by using their site, you’ll be able to create your own will in less time, with far less expense. Or perhaps you’ve decided to buy a book on estate planning and go for it yourself. While it’s true that you’ll create something, and you’ll probably do it cheaply, do-it-yourself estate planning is a move that will cost you more in the long run.

See, while self-produced legal services may seem tempting, they have a lot of negatives. You won’t get lucky and make the perfect estate plan—luck’s got nothing to do with it. You need a qualified estate planning attorney to get the job done right. In this article, we’ll talk about the dangers and downsides of DIY-estate planning.

Mistakes are Easy to Make and Hard to Fix

Lawyers go to law school for years. Estate planners train in the specific field of estate planning law, and even they check their documents over once, twice, three times or more before finalizing them. Typos, confusion with the legal terms, and problems with the signing are all major areas where DIY wills go wrong.

Requirements can seem nitpicky when it comes to estate planning, but these requirements serve an important state interest: preventing fraud. When it comes to witnesses, things get a little tricky. For example, some state laws dictate that a witness to the will cannot be a beneficiary of anything in it, while other laws require witnesses to all sign in one another’s presence. DIY will-making sites, which often service all 50 states with a boilerplate form, are unlikely to tell you that.

The problem isn’t the screw-up, it’s the fact that the error won’t be caught until after you’ve passed on. That’s when your document will have to go through court because it was handled improperly. The court process will be long and difficult, and it’s unlikely that your plan will be carried out the way you wanted it. And, again, this witnessing slipup is just one example of many pitfalls that accompany estate planning.

The “One-Size-Fits-All” Misconception

DIY services are often one-size-fits-all, meaning that they are not specific to your particular estate. Every estate is different, and attempting to standardize it all into a “one hour or less” planning session just isn’t realistic.

For example, you may want to pass on savings bonds to your beneficiaries, or some other similar asset. These assets, however, do not generally pass through a will or living trust. If you try to designate them through those documents, it will become very messy. Coordinating the different assets with the right documents is something an experienced lawyer will be able to do.

Also, DIY estate planners often leave too much up to their family, simply trusting that their family members will “do the right thing” and intuit what the writers mean in their self-made will. However, if family members always cooperated all the time, there would likely be no needed for estate planning altogether. You want to make sure you have, in clear, precise, correct terms what you want done after you die. That will shield against family fights or schisms that could lead to your will be interpreted in a way you did not intend.

Basically, while a DIY service might be cheaper, it actually costs you more in the long run, as slipups and errors, as well as problems coordinating the documents, can lead to major issues with executing your estate plan after you die. The best course of action is to schedule an estate planning consultation.