When a spouse passes away, it can be an alarming discovery to realize that they have more liabilities than they did assets. Paying off these expenses can be extremely confusing for a spouse who was appointed as the personal representative of the estate. When an estate does not have appropriate assets to pay all of the debts in full, they must be prioritized. The first of these debts that should be paid are all funeral expenses and any of the expenses and costs associated with administration.
If the funeral expenses were advanced by the surviving spouse, those can be paid back first. Furthermore, someone who is serving in the process of probating the spouse’s estate will be able to get reimbursed for the cost of administration, like legal fees. Next in line for debts to be paid are taxes that are entitled to preference under state or federal law. Hospital expenses and reasonable medical expenses are the next in line to be paid, particularly to the point that they relate to the final illness. If there are medical bills for treatment that was not related to the final illness, that is included in the remaining category of unsecured loans and credit card bills.
Every legitimate claim in a category should be paid first, before moving on to the next category. This can be a difficult situation for a spouse to find themselves in after the loss of a loved one when the grief and other elements of moving through the claim can be especially difficult. To understand your rights and to move forward with powerful knowledge about the future, schedule a consultation with an estate planning attorney.
If you are using trusts as part of your estate planning strategy, you are engaging with one of the most powerful tools for enhancing your privacy and control now and well into the future. Dynasty trusts have become increasingly popular in recent years as a tool for people to incorporate into their overall process. A trust gives a client the flexibility to change the disposition after a transfer.
Even for many different clients who may be in the process of considering a dynasty trust when there is no estate tax, trusts are very flexible estate planning tools that also provide privacy and peace of mind for the person creating it. Dynasty trusts should always be drafted directly for the purpose of flexibility.
Merger, decanting, amendment and non-judicial settlements are all different possibilities to consider in a dynasty trust. A trust that allows a trustee to make distributions for beneficiaries with the absolute discretion assigned to that trustee may provide more flexibility than a trust that requires distributions made to beneficiaries with an ascertainable standard. All of these terms can be explained to you when you schedule a consultation with a trust planning attorney.
Trusts offer numerous different benefits for people creating the trust, as well as for your beneficiaries down the line. But because there have become so many options in the area of trust planning, a consultation with a lawyer is important to identify the tool that is most appropriate for your individual needs.
Opening your own business is an exciting opportunity, but it is also one that requires thought about things that will happen long into the future in an ideal situation. Most people find themselves suddenly grappling with the problems of a business succession plan far too late. Putting their loved ones in the difficult situation of trying to figure out what to do with the company, and even whether they are legally empowered to take action with that company without all of the tools and implements necessary. Thankfully, doing some advanced planning with the help of a planning lawyer can give you a great deal of peace of mind and also provide clarity to your loved ones in the event that something suddenly happens to you.
There are six critical elements of a powerful business succession plan that enables everyone in a power position to make the crucial decisions required when someone suddenly becomes disabled, wishes to exit the business or suddenly passes away. These six elements include:
- Beginning the planning process as early as possible even before the business owner has a clear idea for the exit plan.
- Structuring the plan with some flexibility to allow to evolve or change
- Bifurcating equity in control
- Diversifying the planning techniques used for the future of the business
- Transferring any tax savings
- Incorporating non-tax factors such as family harmony when the exit plan does include some family members but not others.
The right business succession planning lawyer is a strong advocate for the rights of the business owner as well as for the future of the company when engaged early.
Now that the new tax law has come into place, plenty of people are thinking about what they need to do in order to protect themselves and their future. This often warrants a conversation with your estate planning lawyer, who can tell you more about what you need to know. An estate plan often needs to be updated based on your individual circumstances as well as shifts in state and federal laws. The aggressive tax reform that was recently passed should prompt you to schedule a consultation directly with an attorney. Ensuring that your plan is up to date can make things much easier for your loved ones in the future. The following questions should be considered by anyone who believes that an update to their estate plan may be in order.
Even if you are not yet sure whether you need to revise your strategies or existing documents, a lawyer can help point you in the right direction and give you greater peace of mind about the future. These top questions include:
- Will my estate tax picture be impacted by the new federal law?
- How does my marriage or divorce get affected by the exemption limit?
- Do I have to worry about any state estate taxes because of a property I own in other locations?
- Are my estate documents customized to avoid unintended consequences and carry out my individual wishes?
- How soon should I schedule another review of my estate plan?
Teaching your grandchildren and children to invest is an investment in their own future. This means you are passing down your own individual legacy and the financial expertise you have built over the course of a life time. This is why many grandparents and parents set up brokerage accounts to give family members an early start on investment opportunities.
Recent changes in U.S. tax laws, however, have changed the dynamics associated with multi-generational investment planning. It is often more important now for older generations to keep their appreciating assets with the primary purpose of helping their family members and beneficiaries avoid paying taxes on any of the gains.
In the past, estate planning typically emphasized maximizing the annual exemption gifts and finding ways to get discounted values for gifts tax purposes on any assets that were transferred. However, in light of the new tax laws, currently on the books, investing for heirs now makes more sense. The ability to get a stepped-up basis at death has survived numerous versions of tax reforms.
This gives every member of the current oldest generation in the United States the opportunity to pass down assets to their beneficiaries that could avoid up to $11.2 million in potential capital gains. The best way to implement this strategy is to schedule a consultation with an experienced estate planning attorney and to hold the assets in your own name. You would then invest these as though you are holding on to them on behalf of your heirs. This may seem a more aggressive investment strategy than what you are used to, but younger investors will gain advantages because they do not have to worry about the same amount of market volatility that could impact an older generation.
When thinking about passing on assets to future generations, a common question asked by many people is whether or not they should increase the amount that is passed on to their loved ones. With the passage of the tax cuts and Jobs Act, the lifetime exemption for estate taxes doubles to $11.2 million for individuals and $22.4 million for married couples.
How you choose to pass things on to your loved ones can make things easier for you as well as them.
The lifetime gift tax exemption has also doubled to these same tax amounts. Gifting opportunities in light of these new regulations have to do largely with timing issues and magnitude. The previous increases in these laws have been much more gradual, making it more difficult for people to adapt their gift tax plans now. Consider the impact of a gift to your children on their lives, particularly when you intend to make the gift outright.
It is much easier for many people to pass on an asset or to write a check than to have a serious conversation about the various responsibilities that come with receiving wealth. There may be advanced issues in your unique family situation that should prompt you to contact an attorney about estate planning tools. These could include spendthrift children and addiction issues.
Consider that by the time you are reading this article, some people who have already articulated their new year’s resolutions, may have broken them. Whether or not you put forward new year’s resolution this year, you do have an opportunity in the New Year to make a decision that can impact you and your loved ones for many years to come.
This decision has to do with your estate planning. Research shows that more than half of American adults don’t have any estate plan in place, including a basic will. This means that other people and mainly the court system, will be making decisions on their behalf.
If you don’t take actions to plan ahead, your loved ones are left dealing with the repercussions, all of which can be serious. Going through probate can take time and add frustration to an already-hard situation, so it’s best avoided with the right planning.
This can put your family members in a very uncomfortable and difficult situation after you pass away because your estate will likely need to pass through the probate system. The court is responsible for determining what happens to your assets and this means any individual wishes you may have had prior to an unexpected death were not recorded and will not be carried out. The decision-making process associated with estate planning is not always an easy one, but sitting down and investing some time into doing it can benefit your family for many generations to come.
If you were thinking about putting together a revocable living trust, this can be a powerful estate planning tool. It is one often chosen by people who want to avoid the probate process.
Numerous delays and expenses may be associated with your estate having to pass through probate, which prompts many people to put together a revocable living trust to make things easier for their loved ones in the future.
There are many different types of trusts, but revocable living trusts do not have a special tax treatment associated with them.
This is because the owner of this trust is still classified as the owner of the assets, so you will have to continue reporting income and earnings on your individual tax return as you did in the past. Revocable living trusts can help you avoid the problems typically associated with probate, but not those associated with the estate tax system.
A living trust may include provisions like language to generate a bypass trust upon someone’s death, but these same kinds of provisions are often included in wills or other estate planning tools. Talk to an experienced estate planning attorney today to learn more about the benefits of scheduling a consultation to put together a revocable living trust.
Many people are taking the opportunity to look at their current estate plans and tax plans in light of new tax laws in the U.S. While everyone can benefit from a regular review of their estate planning tools, high net worth clients have the most to gain from setting up a time to talk about estate planning and asset protection planning.
There are a number of different tax implications for wealthy families currently facing the restructuring of their estate and tax plans. Trusts can provide valuable protection from divorcing spouses and creditors and also enhance the control of an individual over how a beneficiary inherits wealth.
This is particularly important for families that have addiction, mental illness, or spendthrift considerations. Furthermore, trusts can be used to help preserve wealth for numerous generations.
Since numerous different states will have their own estate tax regimes and you may own property in multiple states at the same time, anyone who owns property or resides in those states should continue to plan around these state level taxes.
For very high net worth clients who still have exposure to the federal estate tax or live and own property in states with their own estate tax, traditional wealth transfer strategies identified by an experienced estate planning lawyer can be helpful.
Are you getting ready to file your tax returns in New Jersey? Many people who rushed to pay their 2018 property taxes before December 1st will not be able to deduct this expense from their 2017 state income taxes, according to research from the New Jersey Society of CPAs. The IRS recently issued instructions that certain 2018 pre-payments were deductible from federal income taxes in 2017.
While this is true at the federal level, the same is not true for state income taxes. Homeowners may be in for an unfortunate surprise when they realize that their attempts at end of year planning to increase their federal property tax deduction will have no impact on their exact 2017 New Jersey income tax returns.
Setting aside a time to talk to an experienced estate planning attorney in New Jersey can give you a great deal of peace of mind and clear planning strategies for your best interests. You need to look to the year ahead and ensure that you’re using strategies that both work for you as well as truly protect your interests.
It can be a minefield to try and decipher tax laws on your own. Thankfully, however, with the help of a lawyer this process can be made that much easier. Sitting down with an attorney and walking through your current strategies to identify whether or not they will still work for you is a valuable exercise and one you should consider carefully.
If you do not have an estate plan, the state will create one for you by intervening on your behalf. When you pass away, virtually all of your assets are distributed in one of the following ways.
These can include:
- By state law or by will: Anything that isn’t distributed by beneficiary or by ownership will pass through state law. Many people believe that they don’t need a will because they will assume that their spouse will receive everything by ownership or by beneficiary. While that may be true, if both of you were to suffer in an accident together, this can raise significant questions.
- Beneficiaries: You usually will name beneficiaries on life insurance plans, health insurance, savings accounts, and retirement plans. These will pass outside of the probate system because they refer to the specific paperwork you filed directly with those account managers.
- Ownership: If your property was owned by joint tenants with survivorship, the asset will immediately be transferred to remaining surviving owners. If you own your home with a spouse, for example, the spouse will automatically get it. However, you may have other real estate interests that have not been clearly laid out in your estate plan.
You need to consult with a knowledgeable attorney who can help you navigate this process and ensure that you have considered all potential angles in putting together your estate plan.
As you look ahead towards your own retirement, do you think you’ve done enough planning? In volatile times, it’s hard to tell what kind of risks you might face years into the future when it’s time for retirement. You need the support of a team of professionals who can help you guard against major retirement risks.
A solid income plan should always be used to avoid problems with your retirement. If you thought that saving for retirement was difficult, your nest egg needs to be protected well after you reach age 65 or the age at which you intend to retire. Some of the most common risks include taxes.
If you have a silent partner in Uncle Sam because you have been putting away money in a tax-deferred retirement plan, you could be putting yourself at risk for less income than you expect. In addition, investment risk, inflation risk, and legacy and estate risk can all pose problems for you, if you do not have the assistance of an experienced estate planning attorney. When you know how you intend to get to retirement and what you will do to protect your assets once you get there, you will feel much more confident in the management of your estate and the fact that you have done everything possible to minimize potential risks.
There are so many different risks to think about and potential growth opportunities affecting entrepreneurs that far too many of them fall prey to missing out on important planning opportunities. One of these includes not preparing for a lawsuit well before it happens. Most entrepreneurs only worry about this after a lawsuit has been filed or after an accident has occurred. However, at this point, options are limited.
Being an entrepreneur comes with a long to-do list, but it’s still important to consider that protecting your risks is a worthwhile endeavor. Asset protection planning is one worthwhile goal.
Some advanced asset protection planning carried out with the assistance of a lawyer can help you. You don’t want to commit what is known as a fraudulent conveyance, such as moving money around to avoid losing it to a lawsuit once the lawsuit has already been filed. The best time to plan for asset protection planning is when there is no risk in sight. If you plan appropriately, you may be able to settle lawsuits for very little compared to the potential exposure.
The crucial aspect of this is having a comprehensive plan drafted by an estate planning attorney so that those assets cannot be taken from you.
The deaths of icons Whitney Houston, Michael Jackson and Prince rocked the world, but unfortunately, left their families burdened and broken-hearted with estate taxes and fees. Despite having professionals to help with practically every aspect of their lives, none of these artists had a total estate plan, which ultimately ended up costing their heirs millions of dollars and what would have otherwise been avoidable taxes and legal fees.
An estate plan is crucial for the peaceful transfer of assets from your generation to the next. However, even if your estate doesn’t include things like private amusement parks or music rights, there are still takeaways from these artists’ situations to avoid the same costly mistakes. Even though Prince, for example, had paid all necessary taxes without audits from the IRS and had appropriately valued assets, he left no will when he died.
This means that more than 45 people ultimately came forward claiming to be heirs, including nieces, half siblings, siblings and supposed children, which cost the estate tremendous amounts in legal fees to investigate this and respond to it. In order to avoid these challenges, schedule a consultation with an experienced estate planning attorney, regardless of the size of your estate. You can get your own peace of mind and ensure that your beneficiaries receive the assets to which they are entitled well in advanced.
A 529 plan is one of the most common methods for people to plan ahead for their children with regard to education. 529 plans are used by parents as well as grandparents to leave behind assets for a child’s use in college and beyond. The importance of naming a successor, however, cannot be understated.
You should contact your 529 plan manager for the form to submit both primary and secondary successors. The account holder will submit the form naming the successor as the new account owner and if the owner dies unexpectedly, the primary successor assumes all control. Remember that the successor has all the rights of a traditional account owner.
That means he or she can choose to change the beneficiaries, so this should be somebody you trust. Scheduling a consultation with an experienced estate planning attorney who has helped many other people gather the necessary strategies and tactics to protect investments and assets for college education is important. Sitting down and walking through what you intend to do with your assets, including 529 plans and naming successors and secondary beneficiaries on all of your accounts can give you greater peace of mind that your wishes will be followed in the future.
Planning ahead can make things easier for you and your loved ones, even if you are not currently affected by a disability or a medical condition that could lead you into a nursing home. If you do comprehensive estate a minimum of five years before you would need to enter a nursing home, you can help to protect a large portion of your assets from having to be spent on long-term care. Seniors may wish to consider getting some of the assets out of their own name and into their kids’ names. An estate planning attorney and a financial advisor are both recommended, so that you avoid consequences associated with poor Medicaid planning.
Trust planning to help protect your assets can still enable you to have control over the distribution of these assets and know that you will likely be entitled to take advantage of Medicaid when it becomes available to you. Consulting with an experienced estate planning attorney is often the first step in identifying what you need to do to protect your loved ones. Although it might seem difficult to look into elder law planning many years before you might actually need it, it is often these unexpected surprises that can generate concerns for you and your loved ones. Avoid a guardianship proceeding and other challenges associated with long term care planning, by scheduling a consultation with an estate planning lawyer today.
Many wealthy individuals set aside time to sit down with an experienced estate planning attorney to talk about how their bonds, stocks, private equity and more are passed down to heirs. However, they frequently leave out their art collection and do not allow beneficiaries to have the appropriate information to have it valued and protected.
The Art Basel, Miami Beach BS Study called ‘For the Love of Art’ showed that up to 87% of current art collectors intend to pass their collection down to their children, but nearly 60% have not told their heirs how to sell it, appraise it or manage it. The UBS study was part of a bigger research project, looking at more than 2,400 investors that had at least a million dollars in investable assets. For the purpose of the art collection study, 363 art collectors were evaluated.
Many children of art collectors do intend to keep the art that their parents pass down, up to 81%, in fact. However, less than half of those art collectors have even had their art appraised, which is a crucial step for protecting the valuable pieces now and well into the future.
Historically low interest rates have been a major catalyst for economic growth in the last several of years, but this has also led to a surge in private equity firms that are looking to invest in a broad range of small and medium sized businesses.
This means that there is a once in a lifetime opportunity for the owners of these companies to become new millionaires and to raise their value significantly. Research collected by BizBuySell inside reports showed that a historic number of small businesses were sold in 2017’s third quarter.
This represented a 24% increase in the number of small businesses sold than the year before. Furthermore, Thomson Reuters shares that private equity funds generated more than $340 billion in 2016 and there has been a 12% increase in the number of private equity funds over the course of this year. Since the Federal Reserve may raise interest rates throughout 2018, now is the appropriate time to schedule a consultation with the business succession planning attorney to talk about the pros and cons of doing your planning now.
Planning ahead for elder law is just as important as considering your estate and your retirement planning. Unfortunately, despite the fact that elder law has become more popular and widely practiced by attorneys in recent years due to the number of people nearing and reaching retirement, elder law mistakes can still be made that can compromise the integrity of your estate plan and make things more difficult for you or your children.
Some of the most common failings in elder law planning include not addressing any of the following issue, such as:
- Transferring your assets to your beneficiaries in the manner and in the time frame you want.
- Protecting your assets from the cost of comprehensive long-term care and the qualifications for government benefits.
- Choosing trusted individuals who are able to manage your affairs if you are disabled.
- Keeping your assets in your own bloodline and protecting them from the future claims of creditors, lawsuits and divorce as associated with your children.
Furthermore, you will also need to consider the benefits of doing everything you can to avoid a guardianship proceeding. This can allow a judge to appoint someone else to step in and manage your affairs, if you are unable to do so and if you have not explained your desires for who is eligible to step-in in this case.