Loss of Love Doesn’t Have to Mean Asset Loss
Valentine’s Day is coming up, and whether you have someone in your life or not, you still need to make sure your assets are protected. Let’s face it: love doesn’t always work out. In America, the divorce rate is far too high to go into a marriage unprotected. In this article, we’ll give you some tips for managing your assets in a clear, logical way outside of your love, whether lost or not.
Prenuptial Agreement
Ah, the prenup. This vaunted document helps people avoid having their assets taken by their ex-spouse after a divorce. A prenuptial agreement, as the name suggests, is signed before the couple gets married. Couples list which assets they consider separate property versus those they consider marital (shared) property.
If the marriage ends, the prenuptial agreement will help avoid disputes about property and money. If there is an asset that you want to keep as your own, like your house, list it in the prenuptial agreement. Word of advice: if your spouse-to-be refuses to sign it, you might be wise to take that as a red flag.
Post-Divorce Estate Planning
In some states, documents in your estate plan automatically are altered after your divorce is finalized. Whether they are or not, you still need to schedule an appointment with your estate planning attorney to go over documents to ensure they are updated. For example, you might have left possessions and money to your spouse in your will. After the divorce ends, you will want to change that. You’ll want to change any beneficiary names that list your ex-spouse in the blank space. Otherwise, you could find your future plans heavily-impacted.
Incapacity Planning
This one is a little different. As financial scams are on the rise, incapacity planning has become more and more talked about. If your elderly parent or grandparent falls in love with a scammer across the globe and begins sending them thousands of dollars, do you have any legal recourse? Online romance scammers are rarely caught and prosecuted, despite law enforcement’s best efforts.
The best advice that we can give you is to immediately contact a lawyer to see what your options are. If you are listed as the elderly relative’s power of attorney, talk to counsel to determine whether their actions may meet the threshold for you to take control. There’s no clear-cut answer—it all depends on the situation. But, if this sounds like a situation your relative has, unfortunately, found him or herself in, talk to a lawyer as soon as possible.
Exercise Good Judgment
We couldn’t leave this article without a few words of advice. It’s hard, when you’re in love, to always think clearly. Exercising good judgment with regards to their finances is something that people tend to think of last when they’re in a relationship. Below are five red flags to look out for when it comes to finances in a relationship. Hopefully, you take note of them.
Financial Red Flags
- Hiding financial information: if your partner hides information from you or lies to you about their finances, this is a huge sign to watch out for.
- Runaway debt: while everyone has debt, debt that comes from extravagant, nonsensical purchases could be a sign that your partner is not responsible with money. Someone with a spending problem is not a person you with whom you want to mingle accounts.
- Frequent borrowing from family: if your partner is always asking for money from mom or dad, that is a red flag to stay away from. That goes double if they rarely pay the money back.
- Financial control: on the flip side, if your partner tries to manage your money for you or cont
rols what you can and cannot spend, he or she could be a financial abuser. Financial control is an enormous red flag. - Consistent late bill payments: we’ve all been late on a bill a time or two. Maybe we missed the date, forgot, or had an emergency that made us short that month. It’s not a huge deal if a late bill payment happens rarely, but it is a bigger problem if your partner consistently falls behind on bills.
Love can be complicated. We understand that not everything is clear-cut in a relationship, and it is easy to lose your head. If you think that you’ve lost control in a relationship and are in danger of asset loss, contact an attorney immediately to get the situation sorted.
The Super Bowl is Here: How Are You Playing the Game of Life?
Well, the Super Bowl is upon us. In just a few short days, the Rams and the Bengals will battle it out to see who the top team in the NFL is. Everyone has placed their bets (whether literal or figurative), but the Super Bowl leads us to think about another question: how are we playing the game of life?
As with any athletic endeavor, it helps to be prepared. In life, preparation helps as well. Estate planning is a great legal tool for anyone trying to be as prepared as they can for all of life’s eventualities. If you have a solid estate plan, then you know that you are playing the game of life pretty well.
Estate Planning as a Preventative Measure
Essentially, estate planning helps you prepare in the even of your death. Estate planning manages an individual’s asset base after they die or are incapacitated. Estate plans often include bequests of assets to the deceased’s heirs, as well as the settlement of tax laws on the estate. The majority of estate plans are set up with an attorney who is well-versed in the intricacies of estate law where the individual lives.
You can’t plan for death after you’re dead, so you have to set up your estate plan before the worst-case scenario occurs. In the game of life, minimizing the impact of major negative events is important for both you and your family. Here are some of those events listed below:
Death
When you’re making your estate plan, gather up your important documents, along with your contact information. This will help you execute your last will and testament, a document that provides instruction for where you want your assets to go after you die. An attorney should help you prepare the will, as there are a lot of legal requirements and technicalities to which the document must conform, lest it be invalidated.
Other documents that can prepare your assets for transfer include a living trust, which is a great way to avoid probate court. You should also arrange for your digital assets to be secured, should you own any, and you can even plan your final arrangements when you have an estate plan. All of these preparations help your assets be divided in the way you best see fit.
Divorce
For this negative event (or positive, depending on the situation), the work that you do in your estate plan can include removing your ex-spouse as your beneficiary and striking their name through all your legal documents. Though no one can really predict a divorce, you can act quickly to make sure that your former spouse isn’t entitled to anything in your estate plan. Often, meetings with divorce attorneys and meetings with estate attorneys go hand-in-hand.
Illness or Injury
There are two important preparative documents to know before you suffer an illness or injury that leaves you incapacitated: power of attorney and an advance directive. This list is far from comprehensive, but these two are some of the most important.
The power of attorney is a trusted individual that you appoint to manage your healthcare and financial affairs if you become incapacitated. Usually, the power of attorney is split between healthcare and finance—one person handles one task, while another handles the other.
The living will, also known as an advance directive, is important for anyone with specific end-of-life wishes for their healthcare. The directive is a specific set of instructions that you lay out for doctors and nurses who are taking care of you. A common feature of this directive has to do with refusing resuscitation or something similar. Often, the contents of the directive are based in someone’s specific religious or personal views.
Will Contests
There is no surefire way to prevent someone from contesting a will, as you can’t control what other people do. However, you can keep that contest from being successful if your will is executed properly with the help of an attorney. A letter of intent can also be persuasive to a court when determining your will’s meaning. If squabbling over your will is something you foresee in your future, talk to a lawyer to safeguard the document as best you can.
These major events are all negative, but, with the right estate plan, they can be managed properly. Death, divorce, incapacitation, and will contests are all preventable with the help of a good estate planning attorney.
Probate & Trust Administration: Common Questions and Their Answers
Welcome to the world of probate and trust administration. As you might have guessed, there are a lot of technicalities and complexities when it comes to this field. It’s best to contact a lawyer when you’re looking into your own estate or trust, but this article can serve as a basic guide to understanding what you’re working with. Here are ten common questions about this field and their answers.
1. What is trust administration?
A closeup shot of a person holding a gavel on the tableIt’s best to start with the basics. Essentially, the living trust is often considered a vehicle that gets you around probate court. Trust administration refers to the way in which a trustee manages the trust, according to the legal document’s terms. After the settlor (also known as donor) dies, the trustee must manage the trust for the beneficiary’s benefit. Trust administration is the process by which he or she does so.
2. Can you avoid probate court with a will?
A will, by itself, isn’t effective for avoiding probate court. Wills have to go through court when there are assets, as this legal process implements the will’s provisions. If the deceased had a personal representative to act as executor of the estate, this executor will be in charge of administration.
3. What do personal representatives do?
Personal representatives collect the deceased’s assets. They prepare an inventory of the property, clear up debts, and pay taxes owed. You might have to sell some of the deceased’s assets in order to pay the debts. The executor also distributes assets and helps close the estate.
4. How long does probate last?
If the estate does end up in probate, it depends. The amount of debts and assets in the estate will affect is complexity. Also, it depends on how easy it is to contact beneficiaries or whether there are any disputes. If it is a smooth-running, routine probate, the process should last between nine and twelve months, though there’s no guarantee it will be that short. You can see why people try to avoid probate.
5. Does trust administration take a while?
Trust administration can be drawn out as well over a period of months or years, as it all depends on how complicated the estate is. There are five basic steps to trust administration, including inventorying assets, determining the estate tax, dividing the trust assets, filing federal and state taxes, and making distributions to beneficiaries.
6. Is a living trust cheaper?
Living trust can reduce your costs significantly, when you compare it to the fees of probate. However, there is a lot of work to be done, even when administering a simple living trust. Don’t count out the service of an attorney, who will charge for their work. However, the fees associated with trust administration are often lower than the ones for probate, and there is less work involved because the state bureaucracy and courts don’t come into play.
7. What should I do about Social Security?
The Social Security administration will keep sending out benefit checks, unless they are notified of the death of an individual. The executor has to contact the local Social Security office and let them know about the death. If a check is sent after the deceased passes away, the executor must send the check back, along with a notice telling them about the death. This is important, as the executor can be held liable for fraud if they accept checks after the rightful recipient dies.
8. Are you sure I need a lawyer?
Yes, we’re sure. There are a lot of pitfalls, even in trust administration. There are legal requirements and technicalities that can easily invalidate or even lead to liability when you are executing a trust. If mistakes are made, you might be liable to beneficiaries for these screw-ups. Qualified attorneys can help you work through postmortem problems that might arise.
9. What are the duties of a trustee?
The duties include identifying and protecting trust assets, being scrupulously honest, figuring out what you’re supposed to do, and communicating regularly with the trust’s beneficiaries. You may have to manage the trusts long-term until the time comes to end the trust (something that will be determined by the instrument itself).
10. How do I get started?
If you’ve been appointed as a trustee and are totally lost, don’t worry. Contact an attorney, as they will guide you through the process, from beginning to end.
Probate and trust administration can be tricky, so it’s best to seek help if you find yourself confused. If you have a good knowledge base and a good lawyer, things should go smoothly for your estate. Visit our website to learn more.
Cryptocurrency and Estate Planning
Cryptocurrency is the big thing in financial planning. Some people love it, some people hate it, and others are undecided. When you’re estate planning, if you have cryptocurrency, it is important to be very detailed about the crypto, no matter whether it is Bitcoin or something else. You should include information about where the currency is held and what it is. You should also include language in your documents that allows your trustee, if there is one, to manage the crypto without any liability.
In this article, we’ll talk about some of the basics when it comes to cryptocurrency. You can estate plan with this volatile digital currency, and the results can be quite beneficial for you and your family.
What is Cryptocurrency?
If you’ve seen any headlines in the past year, you’ve probably seen crypto mentioned time and again. Cryptocurrency is a collection of decentralized binary data. The binary data acts as a digital exchange. Basically, you buy Bitcoin, Ripple, or Litcoin with regular currency, and you can use it as a form of payment. The value of the cryptocurrency is volatile, plummeting and rising frequently. The main allure of crypto is that it is decentralized. It can be circulated without the need for a bank or government to act as a central monetary authority.
What Loved Ones Need to Know
Basically, if no one knows you have it, then you will lose it, once you die. You need to treat crypto like any other asset when you’re making your estate plan—at least, as far as making sure it is included goes. Loved ones need to know that your crypto stash exists. They need to know where the crypto is, how to access it, and what to do with them. Investors need to choose and execute an estate plan that is based on their circumstances and holdings. If you have a more complex estate, you might need to seek the help of a trustee or custodian.
Tips for a Secure Transfer
While the way cryptocurrency works into your estate plan depends on the value and nature of your holding, there are some good tips for ensuring that the assets don’t get lost after you die. These include:
- With a trusted friend or family member (preferably one who understands at least rudimentarily how cryptocurrency works), share your private keys and seed phrase.
- Splinter the private keys and seed phrase among several trusted friends or family members. That way, no one has total control over your digital assets.
- Create a trust. Then, transfer your crypto assets to the trust. You can designated a family member, corporation, or other authorized entity to manage the trust as a trustee.
- Place your assets in custody, using something like a hardware wallet or software application.
- Utilize what is known as a “dead man’s switch app,” which will trigger the transfer of your crypto assets.
- Instead of choosing a self-sovereign wallet, pick a cascading multi-signature wallet.
One or a combination of these tips might be helpful to you in deciding how you want to manage the asset transfer. The main key is to be strategic and careful about how you structure your plan. If in doubt, contact an attorney.
Digital Asset Custodian Services
There are companies out there that offer custodian services. These include businesses like Unchained Capital, Casa, BlockFi, Genesis, and Anchorage, among others. Some companies offer custodian and trustee services. Some trust companies tend to create lifetime discretionary trusts. But, again, there is no template for a successful digital estate plan. Your solutions can range from the complex to the simple—but almost all plans require some flexibility.
An estate planning attorney familiar with cryptocurrency can help you manage it. A secure transfer is possible, but there are a lot of considerations that go with it. Don’t wait to include your digital assets in your estate plan. Visit our website and learn more about cryptocurrency.
New Year, New Assets to Protect
Well, we made it. It is officially 2022, and, hopefully, things are looking up. We can’t say the same for the case numbers out there, but it’s best to think optimistically, as far as the new year goes. With 2022 upon us, it’s important to think about protecting any new assets that you have obtained or might obtain. In this article, we’ll discuss the most important assets to protect, and you can see if any of them fit you.
Tangible vs. Intangible Assets
Before we get into some examples of assets you must protect, we should discuss the difference between tangible and intangible assets. Tangible assets are, simply put, things you can touch. Intangible assets do not exist in physical form—they usually exist digitally or through legal documents.
Examples of tangible assets include: land, equipment, vehicles, furniture, machinery, inventory, and securities, such as cash, stocks, and bonds. Intangible assets might encompass things like checking and savings accounts, health savings accounts, life insurance policies, retirement plans, and digital holdings.
Documents You Can Use
There are some basic must-haves when it comes to your estate plan. Briefly, we’ll go through the basics of what you need to have in your legal toolkit as a savvy estate planner. If any of these sound confusing, don’t worry, as an estate planning attorney will easily be able to help.
Will
The last will and testament is easily one of the most recognizable of all the end-of-life planning documents. This is a final expression of where you want your assets to go after you die. There are requirements to make a will legally valid, which is why it is not a good idea to try to create your will yourself. If a will is improper, that will cause an ensuing tangle in probate court. Contact a lawyer to have your will drawn up correctly.
Trust
A trust is way to transfer an asset without having to go through probate court. That definition is simplified, but, in this context, it is what you need to know for a basic knowledge base. A trust is a three-party fiduciary relationship. The donor (you) transfers title to an asset to a second party, called a trustee. The trustee holds title to the asset until you designate that it should be transferred to the third party, the beneficiary. If the asset is transfer-upon-death, the beneficiary will receive it once you die, whether it’s a fund or a piece of land.
Beneficiary Designations
Every estate plan should have beneficiary designations. These designations are usually made when there is a life insurance policy, retirement account, or financial account established. These designations let you transfer assets directly to people, regardless of what your will says. You can designate individuals or your estate as the beneficiary. The rules differ, depending on the account itself.
Healthcare Power of Attorney
A power of attorney is a trusted individual that is key to protecting your assets. If you’re too sick or otherwise incapacitated to make decisions yourself, a healthcare POA can make medical decisions on your behalf. A financial power of attorney carries out much the same function, except, instead of medical decisions, he or she makes financial decisions for you when you cannot. As you can see, making sure your POA is trustworthy and sensible is extremely important for this legal tool.
Letter of Intent
Last but not least, a good estate plan should include a letter of intent. This document usually includes instructions about how the executors of your estate should manage your will. The document can be persuasive in court, should there be any questions or challenges. Whether it is legally binding depends on the state, but, at the very least, it gives your loved ones important information about your end-of-life decisions.
This list isn’t exhaustive, but you could find it useful when thinking about your estate planning for 2022. You don’t want to wait to update your estate plan, contact an estate planning attorney today to talk about new updates for the new year.
New Year’s Resolution: Get an Estate Plan
It’s amazing how quickly 2021 has gone. 2020 seemed as though it would never end, with one terrible event after the other prolonging the year. 2021 has gone, by comparison, much more quickly for most people. Now, we have less than a month until the New Year.
As always, everyone is making New Year’s resolutions. A lot of these resolutions have to do with diet and exercise, while others involve curbing spending and other bad habits. Setting New Year’s resolutions is always a good thing, and we hope you stick with yours. We suggest adding a new resolution to the mix if you don’t have one. This resolution is simple: contact WFP and get an estate plan.
In this guide, we’ll walk you through how to set up an estate plan. This guide won’t be the be-all, end-all, but it will hopefully be helpful enough to set you on the right path.
What is an Estate Plan?
An estate plan isn’t just one document, though the word “plan” is singular. This plan encompasses a whole host of documents that concern far more than just where your assets go after you die. Common documents in an estate plan include things like a healthcare directive, where you detail your wishes for medical care in the event that you fall ill and cannot communicate them to a doctor.
Others include things like a power of attorney, which is a specific individual you select to manage your affairs if you are too incapacitated to do so. Of course, you also have things like trusts and living wills, which concern your assets. An estate plan is the ultimate failsafe. If you don’t have one, your estate will revert to probate court, which will use your assets to pay off creditors. Your family will get very little, if not nothing, after you die.
How to Get an Estate Plan
It’s not hard to get an estate plan. All you have to do is contact an estate planning attorney and set up an appointment. The fees and length of time necessary depend on the complexity and value of your property. It’s best to spend the money to set up a good, solid estate plan than to try to cut corners. Trust us, it will be far more expensive to have to fix mistakes after the fact. As with anything legal-related, there are other considerations for you to think about when making your estate plan.
Other Considerations
Updating It
After you set up your estate plan, you’re not done, never to look at it again. You have to update it and review it. Take a look at your estate plan every three to five years or after a major life event. Make any necessary changes and remove anyone who shouldn’t be there. If you’re moving to a different state, you’ll need to ensure that your estate plan conforms to the new state’s laws.
Don’t DIY It
It might be tempting to do it yourself and write your own will. After all, you can follow instructions on LegalZoom, right? This is a terrible idea. The law has a million and one little technicalities and intricacies that are easy to miss when you’re not a trained, licensed lawyer. Making legal mistakes could lead to documents being contested or invalidated, something that will tie up your remaining family in court long after you pass away.
Talk to Family Members
One thing that people often forget when it comes to their estate plan is the importance of talking to their family members. Tell them ahead of time what you plan to do with your assets. If you have young children and want to appoint a guardian, discuss guardianship with the proposed guardian. Keeping an open, honest dialogue will go a long way to prevent any challenges, contests, or confusion after you die.
Hopefully, this guide has at least given you some inspiration to make you realize that an estate plan is the right choice. It’s the best way to give yourself and your loved ones protection and peace of mind, as far as your assets go.
The Season of Giving (And Protecting)
Have you ever wondered why the holidays are considered the season of giving? Though you receive a lot of gifts, you also give them. The religious aspects of the holiday season (no matter what religion you are) often inspire people to give back to those who are less fortunate, including them in their giving as though they were their own family members.
The season of giving might have you thinking about your assets and what you want to do with them after you die. You don’t want them to be stuck in probate court, where they’ll be divied up to your creditors, instead of your family. There are ways to transfer your assets now that will not only protect them, but will also give your heirs the gifts they deserve.
What is Probate?
Probate is a legal proceeding overseen by a judge. The main goal of probate is to satisfy your debts after you die. This means that your assets will go to your creditors, as opposed to your family. Probate court can be avoided, through tools that we will discuss here. These tools include: trusts, joint ownership of real estate, P.O.D. accounts, and small estate provisions.
Trusts
When you think of estate planning, you likely think of a last will and testament. However, that is far from the only option for asset transfer. A living trust, also known as a revocable living trust, is a document that creates a legal entity separate from you. You transfer title to an asset into the trust, and you or someone else becomes the trustee. The trustee transfers title to the beneficiary (the person you want to get the asset after you die) at a designated time.
A revocable trust can be revoked, while an irrevocable living trust, which is often used for Medicaid planning, cannot. The cost to set up a trust is not cheap, but these legal fees are often less than those of probate. It all depends on the complexity and value of your property.
Joint Ownership of Real Estate
Property that is jointly owned with the right of survivorship can avoid probate. This means that when one owner dies, the property passes to the other owner, who has survivorship rights. The property needs to be retitled as jointly owned with the right of survivorship. A new deed might even have to be recorded to delineate survivorship intention; otherwise, it won’t be clear what type of property it is supposed to be, and the estate will end up in court.
P.O.D. Accounts
Bank and financial accounts often allow the holder to designate a beneficiary in the event that they die. This type of account is called a “Pay On Death” (P.O.D.) account. This is far preferable to jointly owning the account, as the P.O.D. beneficiary won’t have any rights until you die, so you won’t have to fight for control while you’re alive. Setting up a P.O.D. account usually isn’t overly complex. You just fill out the form provided by the financial institution, sign it, and, when you die, the beneficiary gets your funds and your account is closed.
Small Estate Provisions
There are ways to avoid probate court if you have a small estate. Most states have these provisions in place. In Florida, you can use a simplified estate process if you have no real estate. Also, all property must be exempt from creditors’ claims, save for amounts necessary to pay for funeral costs and the illness expenses of the last two months before death.
These are far from the only ways to avoid probate, but they are some main ones that you’ll likely run into at some point. Contact an estate planning attorney to discuss more options for asset transfer.
A Year of Uncertainty
Though the events of 2021 have been far less shocking, for the most part, than 2020, things still aren’t certain. A lot of people are still working from home, and it seems like there is a new variant of Covid-19 every other month. The year has been unstable, to say the least, and it begs the question: are you protected?
Having an estate plan is an essential for your safety. If you have an estate plan, you’ll be able to protect your assets and set up your loved ones so that they are not blindsided when you die. In this article, we’ll talk about one of the most important facets of estate planning: the review.
Reviewing Your Estate Plan
Many people make sure that they review their estate plan regularly, planning out a time for the review so that they don’t miss anything. The rule of thumb is to review your estate plan every three to five years. However, that’s not the only time you and your attorney should give it a look. You should also review your estate plan whenever there is a major life event.
What Qualifies as a Major Life Event?
This one is pretty subjective—after all, a major life event for you might not be one for someone else, and vice versa. Divorce, marriage, new babies, deaths, illnesses, and similar circumstances are all examples of when you want to review your estate plan. These major life events can change the course of your plans.
For example, if you’re getting a divorce, you’ll want to take your ex-spouse off documents like life insurance as the beneficiary. If there is a new baby in the family, you might want to add an heir to your posthumous asset plan. Should you fall ill, there are a host of new documents, from last wills and testaments to living wills, that you will likely need in order to be prepared.
Other Reasons to Review
A major life event and a regular schedule are not the only reasons you should review your estate plan. If you’re worried that parts of the estate plan are not completed appropriately (for example, your will doesn’t follow the rules of Florida law), you should have it checked out by another attorney. Self-completed wills often need to be checked by a lawyer, as there are a lot of little technicalities that these documents could have missed.
Also, if you’re moving to a different state, you need to transfer your estate plan. You don’t have to throw it out and start from scratch—that’s not necessary—but you do have to make sure it conforms to the law of the state in which you will be living. The best way to do this is to contact an estate planning attorney who resides in your new state and explain your situation.
Benefits of Estate Plan Reviewing
The main benefit of reviewing your estate plan is that you won’t be caught unawares. You might think that you can put off this process or that you’ll “get to it nearer to the end,” but you don’t want to wait. Waiting can lead to people being left out of the will as heirs, and it can even lead to will contests after the fact. An estate plan is not something you should procrastinate creating, nor is reviewing it something you should wait on either.
It might be tempting to cut corners, but you should absolutely expend what you need to hire legal counsel for your estate plan. This will ensure it is done correctly, saving you the time and money you’d spend if your plan was legally flawed. Contact WFP for questions, advice and to get your estate plan reviewed.
Black Friday and Protecting Your Assets
If you know about Thanksgiving, chances are you’ve heard of Black Friday, too. Black Friday always takes place on the Friday after Thanksgiving. The shopping holiday offers great deals for consumers, and millions of people go out shopping on Black Friday, providing the economy with a huge boost.
Buying assets is great, but how are you protecting them? Estate planning provides a lot of ways you can protect your assets, especially from assets’ worst nightmare: a lawsuit.
Lawsuits in America
America is a litigious society. Millions of lawsuits have been filed over the years, for issues both minor and major. Big money awards usually come from class action lawsuits, and the payouts have come from major companies like General Motors, BP, Volkswagen, WorldCom, and more.
While a lawsuit you face might not be Enron-level (the payout there was $7.2 billion), getting sued can still put a huge dent in your pocket, even if the claims are baseless. If you work in an industry where lawsuits are common, or you just want to protect your assets from the worst-case scenario, consider these legal tools.
Know Your Business Entities
Keeping your personal and business entities separate is important, and, if you don’t take the steps to create a separate business entity, a dispute can cost you everything you own. An LLC or corporation provide protection against liability if you’re sued. If you own a sole proprietorship or partnership, be careful, as they might not offer protection in the event that you’re sued.
Get Insurance
There are some professions that generate more liability than others. Professionals like financial advisors, doctors, real estate agents, and lawyers have to get insurance. Malpractice insurance isn’t the only way to protect yourself against lawsuits. You can also look into homeowners, commercial liability, worker’s compensation, and auto insurance. Shop around to get the best prices for your policy.
Homestead Exemptions
In Florida, for example, a $25,000 is applied to the first $50,000 of your home’s assessed value. Your home has to be your permanent residence to meet this exemption, and you have to have owned the property as of January 1st of the tax year. States protect some level of home equity across the country. So, even if you declare bankruptcy, state law prohibits the courts from giving your home to creditors.
Get Rid of It
Creditors can only seize assets that you own. No matter how bad the lawsuit or how much money you owe, a creditor cannot come for an asset that is not yours. If you are solvent and an asset transfer won’t render you insolvent, consider simply transferring ownership of your assets to irrevocable trust. You can also give away assets as gits. Tax laws allow for some amount of exclusion, based on how much you give.
If an asset means a lot to you and you don’t want to see it taken away by creditors, giving it away might be your only choice. If it’s financially doable for you, it’s an option.
Don’t Wait
Of course, you don’t want to wait to do any of this. It’s too late to transfer once the judgement is rendered. You want to take these steps now if you believe you’re at a high risk of lawsuits. Even if one doesn’t happen, preparedness is still the best option.
Even the word “lawsuit” is enough to make some peoples’ skin crawl. Luckily, there are ways you can protect yourself from going broke in the event of a lawsuit. Contact an estate planning attorney to put some of these tools into action.
Thanksgiving: A Time to Be Appreciative
According to History.com, Thanksgiving started in the 1600s, when Plymouth colonists and Wampanoag First Americans shared a harvest feast. That was the first Thanksgiving celebration in the colonies, and, for the next two centuries, Thanksgiving was celebrated by individual states and colonies.
It wasn’t until 1789 that Thanksgiving became an actual government holiday. President George Washington declared that November 26, a Thursday that year, would be the day of Thanksgiving celebrations. Since then, Turkey Day has always fallen on the final Thursday of the month. It is a time to be grateful, eat delicious food, and watch football.
When it comes to Thanksgiving, we are supposed to be appreciative for what we have. In most households, people go around the table saying something that they’re grateful for. While that’s an awesome tradition, you should take your appreciation a little further. In this article, we’ll talk about the best way to pass assets and wealth to your heirs.
401(k)s and IRAs
401(k)s and IRAs are investment accounts that grow, free of taxes, while you’re alive. They continue this tax-free growth after being inherited by your beneficiaries. Some heirs, like spouses and people who have disabilities, are able to hold these accounts during their lifetimes. But note, most heirs have to empty 401(k)s within ten years.
Your Home
Your house is likely the most valuable, nonfinancial asset that you have. Depending on where you live, heirs may not have to pay a capital gains tax on the house, should they decide to sell it. The heirs will, however, have to keep up with upkeep and taxes, so make sure that whoever you choose is able to do so.
Term Life Insurance
For loved ones who rely on your caregiving and income, term life insurance can be a godsend. You can get a lot of insurance coverage for, comparatively, not much money. Term insurance is a variety of life insurance that covers people for a set term of years. If someone dies within that term, a death benefit is paid. You can make your loved ones your beneficiaries.
Note that if you don’t die during the term, you won’t get the money back. But, that’s not necessarily a bad thing. After all, you’ve purchased home insurance, but that doesn’t mean you want your house to burn down. Term life insurance is an affordable way to safeguard your loved ones who depend on you.
Whole Life Insurance
Whole life insurance is a simple form of permanent life insurance. It covers your entire lifespan, as long as you pay the premiums. When you die, this life insurance death benefit is paid out to your beneficiary. These policies not only provide a guaranteed benefit upon death for your heirs, there is also a cash-value component that you are able to access for long-term care, emergencies, or other needs. Whole life insurance can be more expensive than term life insurance, and you should avoid borrowing against your policy, as that can backfire pretty badly.
Annuities
Simply put, an annuity is a contract that you sign with an insurance company. You make a lump sum payment or a series of payments. In return, you get periodic payments that last for life. You can put your beneficiaries onto an annuity, ensuring that they get a steady stream of income. Annuities that have a death benefit can also provide a huge lump sum for your beneficiary, if you die.
Contact an estate planning attorney to set up these documents, as doing them yourself could lead to legal mishaps and unenforceability. Discuss your estate plans with your loved ones sooner than later, especially if you plan to leave a large amount to charity or leave different people different amounts.