Father’s Day has just passed, and you’ve probably either given or received some pretty great gifts. If you’re a dad, or someone related to a dad, you should know that the spirit of celebration doesn’t have to end just because the holiday is over. There is still a great gift you can give someone in your life, whether you’re giving the gift as a father or to a father. This is the gift of estate planning. Estate planning is the process of arranging and assigning the way in which your assets and debts will be distributed after you pass on. 

Without an estate plan, your family could be looking at some time (and money) spent in probate court trying to figure out what to do. To spare them that tediousness, below are some common estate planning documents you should know.

529 Plan 

     A 529 plan is a tax plan that allows you to set aside some of your assets for the kids in your family who will be going to college. This plan is also called a “qualified tuition plan.” The qualified tuition plan can be sponsored by states, state agencies, or state institutions, and it comes with tax advantages. The 529 plan can operate as a savings account designed to accrue federal and state tax benefits (income tax breaks, low maintenance, simple reporting, control of the account, and more). The impact on financial aid is minimal.

As an alternative to a savings plan, you can have a prepaid plan, which will pre-pay tuition for colleges, either in full or in part. These 529 plans are generally fine to use for out-of-state colleges, but you should check with your estate planner to ensure that they are usable.

Living Trust 

    A living trust is different from a last will and testament. The living trust has three parties: (1) you, the donor, (2) the trustee, and (3) your beneficiary. You give nominal title to the trustee, who passes the title of the asset to the beneficiary after you pass away (or whenever you decide you want your beneficiary to have it). You don’t have to go through probate court with a living trust the way you do with a last will, as a living trust goes into effect immediately. Depending on the trust, it can be revocable or irrevocable. 

Guardianship 

     Naturally, a Father’s Day post couldn’t go by without mentioning the kids who have made you a father. An important part of estate planning for those with minor children is deciding who will have guardianship of them in the event that something happens to you. Keep the guardianship plan updated if there are any changes (for example, if the person you would have chosen can no longer take the kids, make sure you immediately change your estate plan to reflect that). Having someone you trust as a guardian will give you peace of mind and benefit your kids immensely should something happen.

These are just some of the many documents that go into estate planning, and there are tons of other tools in the toolbox that will be right for your particular financial situation. Consult with an estate planner today to keep the Father’s Day gift-giving going. 

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.

New Year, New Tax Bill

Unless you’ve been living somewhere with no internet and no cable for the past few months, you’ve probably heard about the new tax bill, which was recently passed by the Senate. It seems like everyone is debating it; and, from pundits to politicians, everyone has something to say, us included. In this article, however, we will be cutting through the vast melting pot of opinions to give you the information you need about how the tax code will affect important areas of your personal and business life.

There’s a lot to cover, so let’s get started!

The 2018 Tax Code: What’s Going On?

What is going on? That is the question on almost everyone’s mind. Well, when it comes to the estate and gift tax, the answer is: a lot.

In 2018, the estate tax is more of a concern than ever before. This tax hasn’t been talked about much until just recently, but its changes will affect many people. Here’s a rundown of how the 2018 tax code will affect your estate tax.

The Estate Tax

If you own an estate, you are probably familiar with the estate tax. The estate tax and income tax are not to be confused, as the former is paid on the transfer of assets from the decedent to heirs and beneficiaries, whereas the latter is the tax on the income that the decedent’s estate generates. Essentially, the estate tax is a tax on your right to transfer your property post-mortem.

In order to calculate this tax, the IRS takes an accounting of everything you own or have an interest in at the date you die. The tax has a high exemption amount, which means that really only the wealthiest top less-than-one-percent of Americans pay it. However, this tax is going to undergo some changes, thanks to the new bill.

First, you should know that in 2024, there will not even be an estate tax. In 2018, however, the estate tax is still live. There is an $11 million estate tax exemption per person ($22.4 million for a married couple). You may be thinking that you’re in the clear for the estate tax in 2018 if you have under that magic $22.4 million number. However, this depends on what year you die. In addition to this info, you should also know what a gift tax is, as that can further decrease the amount of taxes you pay.

The Gift Tax

The gift tax is pretty simple to understand. This tax is executed when there is a transfer of property after someone dies. This differs from the estate tax in that the transfer of property is not paid for, meaning that there is no consideration (money or something equivalent) received in exchange. It is, simply, a gift.

The gift tax exemption is often unified with the estate tax exemption. This means that you can give away up to $22.4 million in 2018 without being hit with any gift or estate tax. If the exemption grows to a larger amount, you can give more away. A piece of good news is that even if the exemption amount shrinks, you won’t lose the amount you’ve given because there is no penalty. So, the question becomes: are you taking advantage of all you can give away in 2018?

In your estate plan, you decide what to do with your assets. Consult an estate planner to make sure that you’re using these estate and gift exemptions to their full potential. There is a lot of opportunity to decrease the amount of taxes you pay, and with the upcoming tax bill, some big changes are on their way.

“It’s beginning to look a lot like…probate!” This grim twist on a classic holiday song is just what will happen if you don’t take the precautions necessary to protect your family after you have passed on. If you don’t know what probate is or if you’re not sure why it’s such a legal boogeyman, this article will help clear that up.

What is Probate?

Consider this scenario. Your close relative passes away. In the midst of the grief and dealing with funeral arrangements, you learn that she didn’t have an estate plan. Now, with all the other burdens that come with losing a loved one, you have to go to court and endure a lengthy, time-consuming process to have a judge (who doesn’t know your family) divide up your relative’s assets and even saddle you with some debt, if he or she chooses. Sounds awful, right?

It is. This process is called probate. The probate court handles estates whose dispersals have not been planned after the death of the owner. The probate court divides up assets and debts, distributing the estate in the way that it sees fit. This winding up is not always done with the best interests of your family in mind—not because of bad faith on the part of the court, but because it doesn’t know your family well enough to know exactly where everything should go.

To avoid this, you should engage in a process known as estate planning.

Estate Planning 101

Estate planning is also a process, except, in this case, it is one that will help your family. When you are planning your estate, you decide many important things, such as where your property will go, who will take care of your children, who your Power of Attorney will be if you’re incapacitated, and more.

With estate planning, among many legal devices, you set up a living will and trust, and leave health care directives for hospitals and doctors in the event you’re incapacitated and unable to make decisions for yourself at that time. Through estate planning, you are able to avoid probate court by making the decisions that are best for your family.

I have a last will and testament. Is that enough?

A common misconception is that a last will and testament is enough to keep you out of probate court. In fact, when people think of estate planning, they probably just assume it’s making a will and shoving that document in the drawer until you die. However, that’s not what estate planning entails. The process is much more detailed and safeguarded.

Your last will and testament is still subject to probate. You won’t get out of probate court that easy. Many experts look at last wills as an interim measure until your living trust and living will are set up.

A last will and testament is not enough. To make sure you are 100% in the clear, with no probate court on your horizon, set up an estate planning consultation.

The holiday season is fast approaching, and deciding what gifts to get the loved ones in your life can be a fun (if not a little stressful!) tradition. If you’re looking to get a unique gift that is long-lasting, beneficial, and durable for your family, think outside the box and consider setting up an estate plan.

Estate Planning

Estate planning is the process by which you decide where your assets will go after your death, what decisions will be made (and by whom) if you are incapacitated, where your debts will be assigned, and many more important decisions. Dismantling and distributing someone’s estate is a process, but it is far easier and cheaper to carry out when you have an estate plan than it is to go to probate court.

Think of probate court as the Abominable Snow Monster. You want to avoid it at all costs because, unlike Bumble in Rudolph the Red Nosed Reindeer, probate court never turns out to be nice. Instead, probate is a lengthy, time-consuming legal affair that distributes your assets and debts with no regard to what is best for your family.

But, don’t worry! In this article, we’ll tell you how to stay out of probate court by detailing what generally goes into an estate plan. (Remember, these are just a few of the many legal tools you can have in your estate plan).

Key Documents in Your Estate Plan

• Living Will

A living will, as you may or may not know, is also called an “advance healthcare directive.” The living will allows you to determine the healthcare decisions that will be made in advance if you are too incapacitated to give directions to the hospital yourself.

A living will is useful for anyone over 18 to have because, once you are no longer a minor, your parents cannot give the hospital directives in your stead. It’s important to have a backup plan.

• Living Trust

A living trust details how you want your assets, property, and funds to be distributed after you die. It also will describe who will take care of your minor children (if you have them), as well as any specific instructions you have regarding your assets. The difference between this and your “last will and testament” is that a living trust is not subject to probate.

• Durable Power of Attorney

A durable POA is a trusted individual that you name in your estate plan. He or she will make financial and healthcare decisions for you in the event that you are incapacitated. By naming the POA yourself, using your own judgment (as opposed to that of a probate court, who does not know your family dynamics), you can rest assured that you have someone who will handle your affairs responsibly.

• Last Will

Your last will and testament details how you want your assets divided upon your death. This is different from a living trust because this does have to go through probate. Therefore, the last will and testament is mentioned in this list because it can be viewed as an intermediate document until your living will and living trust are set up.

Again, these are just some of the many resources you have that will allow you to avoid the law’s Abominable Snow Monster. You can also set up forms detailing who your beneficiaries are, where your debts will transfer, and other important decisions, all of which wrap up your affairs properly. This Christmas season, give your family the gift of security and peace of mind by scheduling a consult to set up your estate plan.

Football season is upon us, bringing with it cooler fall weather, pumpkins, warm coffees, sweaters, and many more of the great things we love about autumn. And, as any football fan knows, your favorite team is nothing without their playbook and, stored within it, all their carefully laid out plans. Without a strong playbook, a football team cannot hope to win any games.

Think of estate planning the same way. Estate planning allows you to plan what will happen to your possessions, valuables, business, and loved ones after you pass on. There are many reasons why people may not think to start planning their estate as soon as possible. Whether their hesitancy is because they don’t think they have an estate, aren’t old enough, or don’t know where to begin—these reasons should be cast aside in favor of some solid planning.

What Goes into an Estate Plan?

Much like the X’s and O’s in a football play book, there are key elements to an estate plan that you can expect to see throughout. Here are the three main documents:

1. Living Will and Testament

If you are incapacitated and receiving medical care, you will still want to make your own decisions, even in your diminished condition. A living will is a document that allows you to manage your healthcare via a directive. You give the instructions in the living will and testament, and these instructions must be followed.

2. Durable Power of Attorney

With a POA, you are the principal (donor) and, as this principal, you grant someone the capability to act on your behalf legally. If you become unable to make your own decisions, this trusted person can take over for you. If you pick someone you are sure will make good decisions, you won’t have to worry about any issues, even when you are incapacitated.

3. Health Care Surrogate

Your health care surrogate acts on your behalf in medical situations. Often, after becoming seriously ill, a patient is incapable of making his or her own decisions. Estate planning allows you to maintain control using a trusted decision-maker.

As any sports fan knows, you must have a strong playbook to succeed. Estate planning will ensure that your plans are laid out carefully, allowing you maximum security and peace of mind. Don’t drop the ball—contact an attorney today to get started on or update your estate plan.