Is Estate Planning One Of Your New Year’s Resolutions?

Posted by on Jan 19, 2023 in asset protection, Digital Estate Planning, Legal News, Probate, Trusts, Wills |

New Year’s Resolutions: Make Estate Planning One Of Them

The New Year’s holiday has passed us by, and now, we are in a bit of a holding pattern until spring. According to Forbes, around 41% of Americans make New Year’s resolutions each year, and most involve improving mental health, being more active, losing weight, and eating healthier. Might we add another New Year’s resolution to the group, one that you might not have thought of?

Make estate planning one of your New Year’s resolutions. There are plenty of benefits to estate planning, including the ability to control where your assets go after you die. You also will avoid probate court, and you’ll have the ability to arrange guardianship for kids, end-of-life healthcare, and more.

If you’ve already written, “Make an estate plan” in your list of New Year’s resolutions, good for you! In this article, we’ll talk about common pitfalls to avoid when fulfilling this resolution. Many of these pitfalls, happily, can be circumvented by taking advantage of the counsel of a licensed legal professional.

Pitfall 1: Outdated Documents

If you already have an estate plan, you should know that the rule of thumb is to check it every three to five years or if you experience a major life change (divorce, death, marriage, new births, etc.). Outdated documents are a huge pitfall for people who have an estate plan, as not changing your plan with the times means that you’ll forget about new heirs or, conversely, include people in the plan who are no longer in your life.

Pitfall 2: Procrastinating

Of course, a document can only be outdated if it’s there in the first place. A major pitfall in estate planning is the failure to start. Not to sound gloomy, but anything can happen. Life is fragile, and sickness, injury, and death aren’t exactly unheard-of phenomena (we’d be out of a job if they were).

Don’t wait until something bad has happened to make an estate plan or encourage a loved one to do so. The main hook of estate planning is that it is preventative and protective. Contact an attorney today, while you still have your health, to create this plan for the future.

Pitfall 3: Naming Only One Beneficiary

This one is quite common, as naming just one beneficiary is usually more likely to occur to people than having a backup plan. You should always list more than one beneficiary for your assets, a fact that your lawyer will likely reiterate to you. If the beneficiary dies before you do or is out of your life for another reason, you will need to have a contingent beneficiary who is next in line to receive that asset. This is an easy enough pitfall to avoid—you just have to have a backup plan.

Pitfall 4: Not Talking To Your Family First

Estate planning can sometimes be the cause of difficult conversations among family members. Make sure you talk to your family and keep them in the loop when estate planning. Let them know who the beneficiaries and appointed individuals are (and, if need be, why you made those decisions). That way, there are no surprises, and this disclosure can make it less likely that a will challenge will come about.

Pitfall 5: Lack Of Full Disclosure

Attorneys are here to help you, and you need to exercise full disclosure when you’re speaking to one. Tell them your concerns, goals, and financial situation, and the attorney will be able to craft the best estate plan for you. Holding back will only lead to missed documents, incomplete information, and other similar, equally-problematic events.

Though these pitfalls might seem intimidating, they can often be avoided through honest communication with your lawyer. Estate planning can help you secure your financial future, as well as the futures of your beneficiaries and heirs. Talk to an WFP estate planning attorney today to learn more about this important process.

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Estate Planning and Retirement

Posted by on Mar 13, 2020 in asset protection |

When it comes to retirement, you want to feel secure. You’ve put in a good few decades of work, and you want to be able to ensure that you’re able to live out the rest of your life comfortably. Estate planning can help you do so. There are several things to consider when you are working retirement into your estate plan. This article will cover the basics when it comes to planning for retirement, but you’ll want to contact an estate planning attorney for more detailed information on your particular situation. 

The Relation Between the Two 

Technically, a retirement plan should include a good estate plan (as opposed to the other way around). The period during which you are retired is likely to be the one where your estate plan comes into effect. When it comes to retirement, you can plan out your finances through a few tools. The IRA, Roth IRA, and 401(K) are three of the most common—and the most often-conflated. 

What is an IRA?

“IRA” stands for “Individual Retirement Account.” The IRA lets you save money for your retirement in a way that is tax advantaged. The IRS wants to encourage responsible money-saving for retirement, and tax-advantaged plans are one way of incentivizing that. A traditional IRA is pretty straightforward. You make contributions to your IRA with money that the IRS will allow you to deduct on your tax return. The earnings on the money in your IRA are then tax-deferred until you withdraw them in retirement. Then, once withdrawn, they are taxed. 

What is a Roth IRA?

The Roth IRA differs from a traditional IRA in the taxation. With a traditional IRA, the tax payments are deferred until you withdraw your funds. However, the Roth IRA switches that. You are taxed on the contributions you make into your Roth IRA. Then, when you make withdrawals, those withdrawals are not taxed. 

You might want to choose a Roth IRA if you think your taxes will be higher when you are retired than they are now, while you are working (and not spending your IRA). However, there are income limits. You might be barred from opening a Roth IRA if you make too much income. You can only put in $5,500 a year if you’re under 50. People over 50 are capped at $6,500 per year. There is no minimum requirement for either age bracket. 

What is a 401(k)?

The 401(k) is another retirement plan that you’re likely to hear a lot of. The 401(k) is qualified, and it allows employees to save and invest their earnings into a retirement plan. Employers sponsor this 401(k). Only employers can sponsor their employees, which makes the plan different from an IRA/Roth IRA, where people sponsor themselves. 

The 401(k) is given that name because it is the section of the tax code that sets the plan up. The payments are tax-deferred, and employees contribute untaxed portions of their wages into the plan. When they make a withdrawal, the withdrawals are subject to taxation.

Listing Financial Information

When you’re considering these retirement plans, it’s important to think of the big picture with estate planning. You should make a comprehensive, detailed list of all of your financial tools and beneficiaries when you are creating your estate plan. This not only makes it easier for you to be organized, it helps your family get a clear picture of your finances after you pass on.

Again, these are just the basic definitions of tools for retirement. Consulting with an estate planning attorney will allow you to get a better handle on your estate plan and how the two relate.


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Tax Season: Use It Or Lose It

Posted by on Apr 10, 2018 in asset protection, estate planning, tax |

Calculator on the beach

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.

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Digging For Digital Gold – You’ve Mined Your Bitcoin, Now What?

Posted by on Apr 3, 2018 in asset protection, Misc. |

         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.

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Restructuring a Business for Asset Protection

Posted by on Jan 21, 2018 in asset protection, Business Plan |

Restructuring a Business for Asset Protection

          If you have a business, you know how hard you’ve worked to maintain it: all the late hours, countless phone calls, endless paperwork, and more. When you pass on, you’ll want to make sure that these assets you’ve worked so hard for are protected. Estate planning can help you do that.

Not only are regular assets (money, property, etc.) eligible for protection through estate planning, less conventional ones are as well. Bitcoin and other cryptocurrencies can be protected via a trust, ensuring that everything you want protected—even something outside the traditional asset realm—is kept safe and secure.

What is a Trust?

A trust is pretty simple to understand. It’s essentially a three-party fiduciary relationship. You have your trustor (you, in this case), who transfers assets to a trustee for the benefit of the third party, known as a beneficiary. This transfer grants the trustee nominal ownership over assets. These same principles of a three-party relationship apply to your business assets. The trust is treated, by the IRS, as an entity.

When you pass on, your trustee will confer your assets to the beneficiary. You may be thinking, “How is this better than a will?” Many people, when they think of estate planning, automatically jump to the last living will and testament as the golden document to have. But actually, a living trust is more advantageous.

Trust vs. Will

A trust goes into effect the moment you create it, whereas a will only becomes effective after you die. You can use a trust to start transferring your property prior to death; you cannot do that with a will, so you have a little less control. Also, a trust will get you out of probate court. If you die with just a will, you have to go through probate, which is a long, tiring process where a court distributes your assets for you. This can tie up your family for years while a court ensures the validity of the will.

Lastly, a trust can be kept private, whereas a will is on the public record. While a trust doesn’t include the ability to make funeral arrangements and name your children’s guardian if they’re minors, it does let you save on taxes and make disability arrangements.

Crypto: The New Wave

Everyone’s talking about Bitcoin these days, and everyone seems to have an opinion about it. If you’re a Bitcoin investor, or an investor in other cryptocurrencies such as Ethereum, Litecoin, Dash, and more, you’ve heard all the opinions, made up your mind, and, now, most likely just want to know how you can protect your coins via an estate plan.

As cryptocurrency jumps in popularity, more and more estate planners are encouraging clients to work their crypto into an estate plan. Cryptocurrency is, like your other assets, subject to distribution. Your crypto cannot be inherited, however, and, if you don’t include it in your estate plan, it will be as though it never existed. A trust is, as with your other assets, the best way to manage this property.

When deciding how to manage your cryptocurrency, make sure that your intended beneficiary is able to manage an entity like crypto, which is very volatile. You’ll also want to ensure that your directions are clear, including how to access your account to get the coins. This complicated, especially as cryptocurrency is relatively new, hence why an estate plan is best carried out under the guidance of a professional estate planner.

If you want to make sure that your business is protected after you pass on, a trust is the way to do it. Your assets will be protected, and you’ll be able to start the process before death, allowing you a measure of control and the ability to avoid probate.


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Don’t Let Your Assets Be Frozen This Winter

Posted by on Dec 4, 2017 in asset protection, estate planning |

Winter weather is fast approaching (if not here already), and with it comes snow, sleet, and ice. But not in the lovely, sunny South Florida! While we’re lucky enough to not be iced over, your assets can still be frozen. Follow these tips to avoid having your assets frozen this winter.

How Assets Freeze

First things first: what are frozen assets?

Frozen assets are owned assets that cannot be bought or sold in any way because of a debt that still requires repayment. Until the debts are paid or satisfied, the asset’s owner cannot do anything with the asset.

To understand how to circumvent frozen assets, it’s important to know how the process occurs. One way your assets can be frozen is in probate court. Probate, as those keeping up with these articles know, is the court that you want to avoid at all costs. If you die without an estate plan (which we’ll get to in a moment), your assets will end up in probate court to be distributed.

The probate court also has to verify your will, if you have one. This process can take a long time, even more so if someone decides to contest your will. During the verification process, your assets are frozen. Even for time periods of up to several years, they can be frozen.

If that wasn’t bad enough, once the court verifies your will, they will then distribute your debts along with the assets. This has the potential to cause your family hardship if they not only have to go through probate, but shoulder your debts at the end of the ordeal.

Staying Out of the Cold

To avoid sending your assets to the Age of Winter, an estate plan is key. Estate planning is the process by which you arrange for the management and distribution of your estate after your death or if you are incapacitated. Through estate planning, you can minimize taxes and ensure that your family will stay out of probate court and your assets left unfrozen.

This important step ensures that a person’s wishes are upheld and their decisions, if they are unable to make them, are left to someone who they trust. It may be tempting to set aside the thought of estate planning for now—after all, not many people see their death as imminent—but that is not a wise choice. No matter how large or small, you do have an estate, and setting up arrangements for worst-case-scenarios is vital to your family’s financial health.

Don’t let your assets be frozen this winter. Set up an estate planning consultation today.


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