Lessons from the Joan Rivers Estate

Joan Rivers was heralded as a stellar performer, but she also left behind a legacy as an incredible businesswoman. Her estate included income, collectibles, and real estate that was estimated in value between $150 million and $250 million. She left behind detailed instructions for her assets after her death, which is rare in a society when many celebrity deaths highlight the weaknesses of their estate plans. Photo Credit: breitbart.com

Looking at her careful planning, there are a few key lessons: be prepared for the unexpected, outline plans for pets, and correctly title the assets. Joan Rivers was also masterful in giving her family a brief overview of the estate plans to help improve clarity and reduce the possibility of arguments. Rivers made use of family trusts to reduce the tax burden for her beneficiaries and titled her assets

appropriately to allow for the smooth transition of business assets. This act alone helped to diminish her capital gains taxes.

Regardless of the size of your estate, proper planning allows you to pass on assets to your heirs in the most efficient manner while minimizing the tax liability. Contact our offices today for a consultation for your business and personal needs through email at info@lawesq.net or contact us via phone at 732-521-9455.

Newlywed Estate Planning

While there is a great deal to celebrate getting ready for your wedding, don’t neglect this excellent opportunity to delve into your estate planning as well. Unfortunately, as you may already know, accidents can happen at any time. Of course we all hope that nothing impacts your new family and celebrations, but it is critical that you discuss your plans with your new spouse and outline your plans early. Remember that it will be much easier to update them later on once you have decided on the proper documents, but that you should never neglect putting your plan together entirely.

Newlywed Estate Planning

Photo Credit: gogirlfinance.com

You can begin with small steps, like changing your account beneficiaries. This is one of the easiest things to do in your overall estate plan, but there are big ramifications if you’re adding on your new spouse. Do it early. Make sure you update your life insurance, IRA, and 401k accounts, including any others that may have beneficiaries listed in the event that something happens to you.

Your next step should be to look over any wills that both of you have and to ensure that each individual has a solid will reflecting his or her current wishes. Powers of attorney and medical directives are also crucial for new spouses who may be updating their information from the past to reflect their new marriage. For more ideas about transitioning your estate planning to married life, contact us through email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Supreme Court Decision: Inherited IRA NOT Protected

A recent decision from the Supreme Court means there’s no better time than now to review your estate plans and ensure that you have identified the best possible solution for passing down assets to another generation. This new ruling states that inherited IRA funds DO NOT QUALIFY under the category of “retirement funds” under bankruptcy exemption guidelines. Previously, these kinds of funds might have been considered “bulletproof” from creditors, but this new ruling means it could be time to re-evaluate how you’re transferring your assets down to children and other beneficiaries. Is a Standalone Retirement Trust or IRA Trust right for me?

Supreme Court Decision Inherited IRA NOT Protected
(Photo Credit: baltimoretimes-online.com)

According to the Supreme Court, the members of which conducted reviews of the Bankruptcy Code to get more specifics on the situation, inherited IRAs should not count as retirement funds because the individual inheriting the assets cannot contribute to the funds or invest more money into them. Since the IRA also requires that the accountholder draw money from the account, the Supreme Court argued that this would “undermine the purpose of the Bankruptcy Code”.

Each client wishing to establish plans for the future transfer of assets to beneficiaries has their own concerns and situations, which is why it’s so critical that you work with a team of experienced planning attorneys to meet your goals and increase the chances that those assets will be protected and meaningful for the beneficiary. To review trusts and other options for asset transfer, email info@lawesq.net or contact us via phone at 732-521-9455

It’s not all about the cash: Passing on Wealth and Wisdom

It might feel overwhelming to put together your estate plan, but it’s a good tool for you as well as your children. Taking care of your needs early on can encourage children to plan for the long term and to consider their own estate plans. One of the biggest hurdles with regard to estate planning, in fact, is that there’s a general stigma when it comes to talking about money. Simply setting aside some time for the conversation is a valuable process.

Its not all about the cash Passing on Wealth and Wisdom
(Photo Credit: danielharkavy.com)

Many people that estate planning is simply for the management of their assets after they pass away, but that’s simply not true: it plays just as vital a role during your life, too. If you become incapacitated, a comprehensive estate plan will lay out your wishes clearly for your family members and other stakeholders. It’s also a tool that can be used to reduce risk and minimize taxes while protecting wealth- all of which are just as valuable while you are living.

One mistake to avoid in thinking about your estate planning is in seeing your wealth only for what it can do for the next generation in a positive light. Sometimes, there’s another impact that’s often forgotten- what your assets do to them when it comes to unintended consequences. Taxes can take a big hit on the assets if plans are put into place in advance, and gifts may even cause arguments between family members. Not every child, for example, will react the same way to learning that Mom or Dad has left a gift behind.

Estate planning is just as much about your mindset and passing on your wisdom as it is your wealth. To help create a living legacy that makes the most sense for your family, call us at 732-521-9455 or reach us through email at info@lawesq.net .

Banking on an inheritance? Don’t count your chickens before they hatch!

New research from the Insured Retirement Institute shows that although nearly two-thirds of older individuals considered leaving an inheritance behind important in the past, those numbers have shifted out of beneficiary favor. According to their report, less than half of baby boomers today believe it’s critical to leave behind an inheritance.

1
(Photo Credit: greekweddingtraditions.com)

So, what’s behind this big shift in attitude? Many older individuals and couples want to see that you are capable of handling an inheritance first, taking the following factors into consideration:

  • A pattern of good financial decision-making skills. This doesn’t mean you’re mistake free on your credit report. Parents just want to see improvement and a pattern of it to verify that you’re responsible enough to handle a lump sum inheritance.
  • Understanding of your own financial missteps and accomplishments. Once again, it’s not about being perfect. Some older parents thinking about an inheritance left behind want to know that you’ve made your mistakes, learned from them, and moved on. It’s a sign that you’re growing in terms of financial independence and understanding. If you have a pattern of racking up debt and then struggling to pay it off, however, that’s not a good sign.
  • Debt awareness. Are you making student loan payments? That’s okay, because it was an investment in your future. Credit card debts and big car loans, however, show that you might not be familiar with the right kind of debt- or the right way to pay it off. Both are red flags for parents.
  • Educate yourself. No need for a post-graduate degree here, but certainly some financial education on your own through books, planning, and even videos can be really helpful. Find out your weak spots and work to improve them on your own. This shows ambition and desire, both of which parents love to see.

There’s never been a better time to get started. To discuss your plans for asset protection, tax minimization, and your estate, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Discuss Finances Before Saying ‘I Do’

If you or someone you know is planning a wedding anytime soon, there are many things to consider. One of the most important of which is finances. You must discuss money with your future spouse, even if doesn’t sound romantic.

English: A Catholic wedding ceremony in Milwau...
(Photo credit: Wikipedia)

Talking about finances is at least as important as discussing the reception or honeymoon. Maybe more important.

Talking about finances — budgets, insurance, savings and so forth — could be critical to ensuring a happy marriage, says a story on cnbc.com.

Setting a specific time to sit down and talk about how you want to organize your finances after marriage is key. Will you have joint checking accounts or separate ones? Who is going to manage the money and pay the bills? These are just some of the questions that must be asked.

It is also critical to set a budget and put your expenses and financial goals down on paper. It is important that each partner be okay with the other’s spending habits.

If there are disagreements, the couple may want to obtain the advice of a marriage counselor or financial advisor.

Other areas to discuss are life insurance ( a “must” for most couples, according to the article); debt, if there is any;  disability insurance; homeowners insurance; health insurance; and an estate plan, or at least a plan to designate beneficiaries in case of one’s death.

Enhanced by Zemanta

3 Estate Planning Mistakes From Which To Learn

If you haven’t already done your estate plan, perhaps hearing a few horror stories about people who made common mistakes will prompt you to do it — and do it right.

Last Will And Testament
Last Will And Testament (Photo credit: Ken_Mayer)

An article in the Green Bay Press Gazette, recounts a few cases that detail classic mistakes involving estate planning, or the lack of it.

  • A former Supreme Court justice wrote his own will, using just 176 words. It cost his family $450,000 in estate taxes and court fees because he didn’t take the time to do it right.
  • Lesson: Know what you know, know what you don’t know.

  • A young woman left her assets to her minor son. When she died, she had $1 million in her estate due to a wrongful death claim. Her son died soon afterwards and the money went to his only heir, his father, who was a drug addict.
  • Lesson: She could have put the assets into trust with a contingency plan were he to die, so the money could not go to the father.

  • A father had a stroke and had to go into a nursing home. His children closed his bank account but never went through his mail. After he died, they found a statement for a $1 million life insurance policy. But the premiums had not been paid since the bank account was closed. They didn’t get the money.
  • Lesson: Make sure somebody knows what assets you have, usually the person who has power of attorney, a trustee named in a trust you have set up or the personal representative named in your will.

These are common mistakes that can be avoided if you engage a qualified estate planning attorney to help you with your estate plan.

Enhanced by Zemanta

How To Handle Leaving Unequal Amounts To Your Children

Many parents divide their assets equally among their children. That’s the easy way.

Family discussion
(Photo credit: Muffet)

But what if you want to give more to one child than to another? Is that fair? Is it a good idea?

Sometimes it may be the best plan. For example, maybe one of your children earns much more than the others. Does this child really need to share equally in your estate?

Maybe one of your children has several children of his own, while the others are childless or have only one child. That may be a good case for giving the child with the most children a larger share.

Another reason might be that one of your children spent a lot of time and energy caring for you in your old age. Shouldn’t that child get rewarded?

And what if one of your children went down the wrong path? Maybe he became addicted to drugs or alcohol. Should this behavior be reinforced?

These are difficult decisions posed in an article in the Wall Street Journal. And they can lead to hurt feelings, lawsuits and other problems.

If you end up giving different children differing amounts in your will or estate plan, your decision may end up being challenged in court by the child or children who got less. It could turn into a mess.

To make sure your wishes are carried out, make sure to prove that you are of “sound mind” when you drew up your plan. You might want to get a letter from your doctor or psychologist saying so.

At the same time, make sure to talk to each of your children and explain what you are doing and why. This could result in fewer bad feelings.

Perhaps you can establish a pattern by helping those who need the most help while you are alive, as well as helping those who help you by giving them financial support during that time.

You can also include clauses mandating that disputes be settled through mediation or arbitration, not litigation. You can even include a “no contest” clause that says if any of the beneficiaries tries to contest the will, that child’s share is forfeited.

These are tough decisions that your estate planning attorney can help you make when drafting your will or estate plan.

 

Enhanced by Zemanta

Teenager Gets $25 Million Fortune – With One Catch

Actor Paul Walker of Fast & Furious fame, who died in a car accident in November, left his entire fortune of $25 million to his 15-year-old daughter, who had recently left her mother and childhood home in Hawaii to live with him in California.

Paul Walker at the Fast & Furious premiere at ...
Paul Walker at the Fast & Furious premiere at Leicester Square. (Photo credit: Wikipedia)

Walker did not leave a dime to any other family members or even his girlfriend.

But Walker’s will did have one catch. His daughter, Meadow, will not be able to touch the money until she becomes an adult. Nothing unusual there, except that Walker named his own mother to be Meadow’s guardian.

According to an article on cafemom.com, this is a bit unusual and could be tricky. One wonders why he named Meadow’s grandmother as her guardian rather than Meadow’s own mother, Rebecca Soteros.

However, the matter will be decided by a judge later this month. In the meantime, Meadow is back in Hawaii living with her mother.

Walker was a very private person and not much is known about the circumstances of his breakup or the decision to have Meadow come live with him in California.

Enhanced by Zemanta

Florida Court Ruling Provides Guidance For Those Using Trust For Asset Protection

A recent appellate court ruling in Florida gives former spouses the legal grounds to take funds from a type of trust that was thought to be unavailable to them.

State flag of Florida
State flag of Florida (Photo credit: Wikipedia)

Discretionary trusts are set up by the wealthy to give a trustee the authority to make or not make distributions from the trust. But the ruling late last year in Florida gives ex-spouses and the children of beneficiaries more leeway to gain access to those funds in certain circumstances.

However, estate planning experts are divided over whether this ruling establishes a precedent for other states, according to an article on fa-mag.com.

In this case, Bruce Berlinger challenged a lower court ruling that allowed his ex-wife, Roberta Casselberry, to obtain funds from a discretionary trust fund after he stopped paying her $16,000 a month alimony. The trust had been paying the money directly to her and not to him.

Usually, a creditor may not garnish funds in a discretionary trust if the trustee does not make the distributions to the beneficiary. In this case, the court ruling the ex-spouse was deemed to be an “exception creditor “and could seek distributions from the trust to satisfy her alimony requirements.

About 30 states have some form of “exception creditor” provision in their trust codes.

Enhanced by Zemanta

Hoffman’s Will Raises Legal Issues

Actor Phillip Seymour Hoffman, who died of a drug overdose in February, had not updated his will in years. The mistake could prove troublesome for two of his daughters and their mother.

Philip Seymour Hoffman won a Academy Award for...
Philip Seymour Hoffman (Photo credit: Wikipedia)

The will was signed in 2004 when the actor had just one child, Cooper, now 11. But he subsequently had two daughters, Tallulah and Willa, neither of whom are mentioned in the will.

This may or may not be a problem.

The award-winning actor, who was just 46 when he died, left everything to his longtime companion, Marianne O’Donnell, the mother of his three children. But that’s just the beginning of the story, according to an article on Forbes.com.

Since Hoffman and O’Donnell were not married, she does not get any of the estate tax breaks available to spouses. You can give an unlimited amount to your spouse during life or in an estate plan, with no federal or state tax applied.

Hoffman was worth an estimated $35 million at the time of his death. The federal estate tax exemption is $5.3 million, but the rest is taxed at up to 40 percent. New York has its own estate tax of up to 16 percent for non-spouses, with a $1 million exemption.

In all, Hoffman’s estate will be taxed at more than $15 million. And since they were not married, any assets that remain at O’Donnell’s death would be taxed again.

There may be a way out for O’Donnell, however, The will allows for her to turn down all or part of her inheritance and put it into a trust. Any assets that go into the trust bypass her estate and cannot be taxed when she dies.

But the fact that only Cooper was mentioned in the will, complicates the matter. The will provides that he get half the principal of such a trust when he turns 25 and the other half when he turns 30. However, the law of New York and most states protects children not named in a will that has not been updated from being disinherited.

The article suggests that O’Donnell, who is the executor of the will, should appoint a guardian to represent the two sisters.

Other matters that could complicate matters include if Hoffman had set up a retirement account or a life insurance policy.

But all the confusion could have been avoided if Hoffman had included a clause in the will stipulating that any reference to Cooper includes any other children born after him.

Enhanced by Zemanta

Review Your Financial and Estate Planning Goals for 2014

A recent article quoted financial planner Michael Joyce as saying, “There’s nothing magic about reviewing goals […], but it is a good time to refocus people on their financial goals.” Joyce’s statement could not be moretrue. It is good practice to periodically review financial and estate planning goals, and the end of the year or the beginning of a new year is a great time to check this off of the to do list.

English: Picture I made for my goals article
(Photo credit: Wikipedia)

Individuals should begin their review by checking the beneficiary designations on their retirement accounts, life insurance policies, 401(k) plans, and any other account with a beneficiary designation. It is important to not only ensure that a beneficiary has been named, but also that the named beneficiary is still appropriate.

Additionally, review the provisions in your will and trust documents. Consider whether any provisions need to be changed, added, or omitted. This is especially important if you have experienced a marriage, divorce, or the birth or death of a loved one since you first signed your will.

Individuals should also consider any tax law changes that will impact their assets. Tax laws are in constant flux, so a periodic review of applicable laws is the best way to plan to reduce anticipated taxes. This review should also include a review of gift tax limits, which may encourage an individual to increase year-end gift-giving in order to achieve a greater tax benefit.

Enhanced by Zemanta

The Biggest Estate Planning Mistake You Are Probably Making

An estate plan is not one document. Rather, it is a collection of various documents that deal with a wide variety of assets, and leave instructions for various situations. An important part of any estate plan is a person’s beneficiary accounts. As a recent article explains, one of the most widespread estate planning mistakes occurs when people fail to update their beneficiary designations.

Beneficiary accounts such as IRAs, retirement accounts, insurance policies, mutual funds, bank accounts, brokerage accounts, annuities, and 529 college savings plans are accounts that are transferred to a designated beneficiary immediately at the death of the account holder.

Importantly, a person’s will or trust does not trump his or her beneficiary designations. For example, if a divorced man failed to take his ex-wife’s name off of his retirement account before he died, the proceeds of the account would go to his ex-wife. This would be the outcome even if he clearly stated that the ex-wife was to be disinherited in his will.

It is good practice to update your beneficiary designations once every few years and after important events, such a marriage or divorce.

Watch That Step!: Estate Planning Oversights to Avoid

In order to have a solid estate plan, it is important to not only carefully put the plan together but to revise it regularly as well. With all the work involved, it is not surprising that estate planning oversights are common. A recent article discusses several estate planning oversights that can lead to unintended consequences.

  1.       Failing to Plan: The largest estate planning mistake a person can make is failing to create an estate plan. If a person dies without an estate plan, his or her assets are distributed to his or her heirs in accordance with state law. This might provide the outcome the decedent had wanted, but often it does not.
  2.       Failure to Understand the Difference Between Probate and Non-Probate Assets: A probate asset is any asset that is transferred through a will. These assets go through the process of probate. A non-probate asset is transferred by contract, outside of the will. In order to create the most efficient and cost-effective estate plan, it is important to understand the differences between these two types of assets.
  3.       Failing to Pay Attention to Tax Apportionment Clauses: State and federal taxes may be assessed to various assets according to different rules. While some assets may be taxed, others may not. This becomes problematic when two children receive two inheritances of equal value but one has to pay taxes while the other does not.

Using a Trust to Protect Your Legacy

For parents of minor children, passing assets on to their children cannot be the only focal point of estate planning. Rather, parents must have a plan for the management and control of these assets until the children are old enough to handle them responsibly. A recent article discusses how trusts accounts can be used to accomplish this goal.

Even if your children are no longer minors at the time of your death, they still may be unable to responsibly handle an inheritance. There are a number of reasons that this may be the case, such as immaturity, substance abuse, or mental incapacity. Additionally, parents who leave their children particularly large inheritances tend to spread them out until the children reach age 25 or 30.

No matter how you choose to structure the distribution, the simplest way to do so is through a trust. When creating the trust, you can select a person to manage and distribute the assets for your children (a “Trustee”). Additionally, you can leave detailed instructions for the trust to ensure that the assets are distributed the way you would have wanted. For example, you can specify that funds will not be released until a child is 25, unless he or she needs them for college tuition.

Furthermore, a parent can design the trust so that he or she retains access to all assets within the trust during his or her lifetime. That way there is no worry that the assets are being given up too soon. Finally, during the life of the trust, it can provide the added bonus of protection against divorcing parents, creditors, plaintiffs, and business risks.

Avoid These Common Estate Planning Mistakes

Estate planning is a field fraught with pitfalls. All too often, estate planning mistakes are discovered after the person who created the estate plan has passed on, so he or she cannot fix the problem or explain his or her intentions. A recent article discusses several estate planning mistakes to avoid.

Naming Special Needs Minors or Adults as Beneficiaries
This is often problematic because special needs individuals often receive benefits from the government. However, most of these benefits are needs based, and may cease if the individual receives a large inheritance. Therefore, gifts to special needs individuals must be structured in a way – such as a trust – that keeps them out of the immediate control of the individual.

Failing to Name a Contingent Beneficiary
Failing to name a contingent beneficiary becomes problematic when the primary beneficiary either predeceases the person who created the estate plan, or disclaims his or her share. In either situation, if a contingent beneficiary is not named, the share would pass in accordance with the intestacy statute under state law.

Naming Your Estate As The Beneficiary on a Retirement Plan
When an individual receives the proceeds of a retirement plan after the death of the plan owner, he or she can take advantage of special IRA “stretch out” provisions. Using these provisions, the beneficiary can structure the inherited IRA to receive distributions throughout his or her life. These provisions do not apply when the beneficiary on the plan is an estate.

Thanks Gramps! Planning Gifts to Grandchildren

Often, grandparents who have extra money wish to assist their grandchildren financially. A recent article discusses three ways through which grandparents can give to their grandchildren.

Grandparents with a child
Grandparents with a child (Photo credit: Nestlé)

Write a Check

Many grandparents simply write checks to their grandchildren without thinking twice about it. Under current tax rules, a person can give as much as $14,000 per recipient per year, without tax consequences. If you would like to give an individual grandchild more than $14,000, consider using another vehicle to avoid tax consequences. Finally, remember that this type of gift is often calculated into a giver’s estate for the calculation of whether a person is eligible for means-tested government programs such as Medicaid.

Invest in a College Savings Plan

If you want to assist your children with paying for a college education, consider a 529 account rather than simply writing a check. With a 529, you can be certain that the money is spent exactly how you would like it to be spent. Additionally, 529 accounts offer important tax benefits that will not have any impact on your grandchild’s ability to apply for means-tested financial aid.

Use a Gift Trust

Finally, you can transfer money to your grandchild through a gift trust. A gift trust is an account that you set up where you or a named individual serves as the trustee. The trustee can direct the timing and use of any distributions made from the trust.

Enhanced by Zemanta

Back to the Basics: Estate Planning for a “Typical” Family

Contrary to popular belief, estate planning is still important for the vast majority of Americans who are not wealthy. After all, after a person has worked his or her entire life to amass all of his or her assets, he or she should seize the opportunity to direct what happens to the assets after his or her death. A recent article discusses five important estate planning maneuvers for the “typical” family (although we are pretty sure there is no such thing as a “typical” family).

Day 73: Kerns family self portrait {about me}
(Photo credit: lorenkerns)
  1. Sign an Advance Health Care Directive: This document allows you to put your wishes in a document to be followed by your doctors, concerning the end-of-life medical care you’d like to receive.
  2. Complete a Durable Power of Attorney, which will allow you to select the person who you would like to take control of your financial affairs, should you become unable to do so.
  3. Execute a Last Will and Testament: This is an important document because it directs the distribution of your assets. Through your will, you designate the guardian for your minor children.
  4. Complete and review your beneficiary designations: These are the designations on policies, such as life insurance, that pass straight to your intended heirs upon your death.
  5. Be sure to consider the impact of property held via joint ownership. Such property is inherited immediately by the joint owner upon your death.
Enhanced by Zemanta

Planning With a Baby on Board

The birth or adoption of a new child is a frenzied and joyous time in the parents’ lives. Understandably, estate planning is often the last thing on the minds of expectant parents. However, as a recent article explains, certain parts of estate planning are essential for a growing family. Expectant parents should consider at least the following two questions, and plan accordingly before it is too late.

Children, Baby new born
Children, Baby new born (Photo credit: Wikipedia)

Who Would You Trust to Care For Your Children?

Should the unthinkable happen and neither you nor your partner are able to care for your children, it is important that you have a plan in place. If you do not designate a guardian for your children, or the guardian you have designated declines to serve, the court will select the person who will care for your children. This may or may not be the person that you would have chosen.

Do You Have Life Insurance?

Life insurance is an important part of the estate of many parents. Life insurance provides a guaranteed sum of money that can finance the care of your spouse and children. For extra protection, you can designate that if you and your spouse pass on before your children reach the age of majority, the money will be kept in trust and distributed only by a designated trustee. You can further designate that, should you die after your children reach the age of majority, they can simply receive the sum outright or in installments at various ages such as 21, 25, and 30.  Yet another popular option is to allow the money to stay in trust forever to maximize asset protection, while ensuring financial needs are met.

Enhanced by Zemanta

Plan to Avoid Inheritance Tax

Although taxes may be one of the items furthest from an individual’s mind when a close friend or family member passes away, a large amount of people will unfortunately face death tax issues at what is already an extraordinarily difficult time. A recent article discusses how individuals can plan their estates to shield their beneficiaries from this fate.

It is first important to understand how common tax issues are in estate planning and administration. According to chief fiduciary officer at Bank of the West in San Francisco, “One in 10 estates have some tax issues . . . There’s nothing worse than being in your worst grieving moments and having to deal with financial chaos.” There are a variety of state or federal taxes that may plague a family after a death.

In order to plan for and avoid these taxes, it is important to create an estate plan that takes them into account. One tax issue may be an unpaid federal or state tax liability. This often occurs when a person faces a long illness before his or her death and no one took charge to see that financial obligations were met. There may also be unforeseen federal or state taxes due. Although federal estate taxes don’t kick in until the estate is worth $5.25 million, some state estate taxes apply at much lower levels. For example, New Jersey’s estate taxes apply at $675,000 while New York’s estate taxes apply at $1 million.