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.

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.