If you’re like most individuals, you already know that estate planning is a good idea, but you might have put it off for one reason or another. There are five primary things that you can hope to accomplish in the estate planning process.
Leaving Behind Property
You might use a living trust, simple will or both if you do not have substantial wealth. You can also use other methods of passing on property such as beneficiary designations, transfer on death accounts or co-ownership. If you have a large estate, you may use ongoing trusts to pass on property.
Providing for Young Children
You will want to ensure that your young children will want to be cared for if you pass away before they become adults. You can name guardians in your will as well as managers to look after their inheritance.
Planning for Incapacity
One of the most important and overlooked aspects of estate planning is what would happen if you ever became unable to make financial and medical decisions for yourself. You can use a healthcare directive to name an individual who is able to make medical decisions on your behalf.
One of the most common reasons to schedule a consultation with an experienced estate planning lawyer is avoiding probate. Probate is the court managed process for wrapping up an estate, but it can be expensive, long and complicated for heirs to sort out. A little planning makes probate fairly easy to avoid using joint tenancy, pay on death accounts and trusts.
While many people will not owe federal estate tax, you may want to use your estate plan to reduce the taxes that could be owed after you pass away.
Make sure that you consult with an attorney who is thoroughly experienced in the process of establishing estate planning tools and strategies for your best interests.
Probate is a very common legal procedure that many people think of as an expensive and complex process. For simplified estates, however, probate might be a basic formality. Probate is the court’s way of a judge having discretion over the legal permission for assets to be passed on.
If a person passes away with a will, then probate is necessary to
implement the provisions of what’s inside that will. However, the probate
process can also be triggered through state laws of inheritance if the
individual passes away without a will and has property that must be
If the decedent owned accounts that fall outside the probate process,
such as a retirement account, but the beneficiary has passed away prior to the
owner of the account, probate law mandates that the account go through the
court so that the funds can be passed to the individual who is legally entitled
to receive them under state law.
Some people don’t want to go through the process of probating a will. If
the decedent owned property that was not specifically organized to avoid
probate, then there is no way for a beneficiary of an item to obtain legal
ownership without the probate process. It is possible to avoid probate
completely with careful planning carried out by an estate planning lawyer.
This can avoid certain taxes, reduce legal fees and ensure that the
assets inside your estate are kept private. Schedule a consultation today with
an experienced estate planning lawyer.
When you think of the process of estate planning, there are two likely instruments that pop into your mind; a trust and a will. Wills are relatively easy to understand since these are the primary documents through which you could pass assets on to future generations.
The concept behind trusts, however, is somewhat more difficult. One of
the most important questions you need to ask as you put together a trust is who
will serve as the trustee. Your trust can serve a variety of purposes, and you
can think of it as a way to control property.
The word trustee implies a certain amount of responsibility and it is
certainly true that trustees have a fiduciary duty to their beneficiaries. This
means that the trustee owes absolute loyalty to the beneficiaries, so it’s such
that they cannot act in any way that they do not reasonably believe is in the
best interests of the beneficiaries of the trust.
Decisions that are made in good faith that ultimately prove financially
harmful, are typically not categorized as the fault of the trustee, although
disputes can and do arise between beneficiaries and trustees over these issues.
Bad faith decisions, however, can cause legal actions and the trustee
could even be held liable for lost funds. This makes it imperative to only
select the right person to serve in the role of trustee over your assets.
Scheduling a consultation with an estate planning lawyer can help you become
more familiar with the different types of questions that you should ask when
choosing a trustee.
The probate process should run quickly and smoothly, but this is not always guaranteed and the leading reason why people choose to use estate planning strategies and tactics to avoid the probate process. Probate refers to the process of distributing an individual’s assets after he or she passes away through court supervision.
One of the most important aspects that determines the process of probate is whether or not the individual has a last will and testament in place at the time of his or her death. Any assets that do not pass directly to the beneficiaries will go through the probate process.
Some of the assets that are exempted from probate include, life insurance policy, distributions and certain retirement benefits. Even if you believe that you have a relatively simple estate, it will still be in your best interests to avoid probate. This is because the probate process can swallow up resources and time that delay your loved ones’ ability to receive your assets but can also add further stress and can lengthen the amount of time that it takes to close out your estate by years or even months.
Taking care of your loved ones and ensuring that they receive your assets in a prompt manner in addition to receiving privacy are some of the leading reasons why people prefer to use estate planning tools such as trusts. The probate process may work well for small estates in certain instances, especially for those who died without a last will, but most other people will want to go through the process of ensuring that their assets are passed on quickly and effectively to their loved ones.
Establishing someone as the executor of your will requires advanced planning and careful thought about whether or not this person is indeed comfortable to serve in this role.
This requires telling this individual that you intend to install him or her as executor and ensuring that they feel confidence in their ability to serve in this role successfully. Understanding the duties of an executor in a will can help you to select the appropriate person to serve in this role.
Being selected as an executor is an obligation, as well as an honor.
Prior to accepting, it’s important to understand exactly what you’re getting
When serving as an executor, you will distribute the individual’s personal
property after arranging for the payment of the estate expenses and debts. Some
of the most common duties tasked to an executor include:
taxes and filing tax returns.
an account for paying bills and estate debts.
will for probate.
type of probate.
inventory with the court.
Depending on the complexity of the individual estate, this could be a
very large responsibility. Generally, executors tend to come from the creator’s
children, siblings, parents or spouses. Many executors who are close family
members do not ask for additional compensation, but an executor can receive
payment as part of serving in this role.
Perhaps you are a loved one of adult elderly parents who may be in need
of nursing home support and assistance or perhaps you are trying to help a
friend who may need to go into a nursing home very suddenly.
Paying for nursing home costs unexpectedly can quickly destroy a lifetime of savings. Long-term care costs can eliminate everything that you’ve accumulated over the course of your life. This means that it is important to retain the services of an experienced Medicaid crisis planning lawyer.
Medicaid crisis planning involves helping a person in a nursing home to
save some of the assets before these are eliminated. A combination of
strategies can be used in Medicaid crisis planning that can protect tens of
thousands of dollars. Some of the strategies include assistance with the
application process, understanding state statutes on Medicaid, and compliance
with federal Medicaid law.
Relevant factors in a Medicaid crisis planning situation include the age
and health of the estate owner, individual family circumstances such as
divorce, the type of assets currently inside the estate and the value of assets
currently inside the estate. A knowledgeable elder law attorney should step in
quickly because timing is critical in Medicaid crisis planning. The sooner that
you are able to take action, the more money can be saved.
Even if you have already been engaged in the spending down process for
some time, if you still have significant assets to protect but are looking to
go into a nursing home very soon, you need the support of a lawyer who will
help you with this planning process.
There’s a strong chance that you don’t have the knowledge, patience, interest or time to deal with complicated financial matters. This is one of the biggest reasons why people end up pushing these important financial and estate planning considerations off your plate and into the wings. But it can be a big mistake to ignore financial and estate planning opportunities altogether. If you need assistance, it’s important to remember that you can get help.
There’s no harm in seeking the services of experienced financial planners and estate planners. Make sure that any individual that you’re contemplating bringing into your personal life is thoroughly vetted. This means that they should come with reviews from other people who’ve had the opportunity to work with them and that they are willing to sit down with you during an initial consultation during which time they shouldn’t be focused on trying to sell you anything.
This person should be committed to understanding your individual perspective and primary concerns so as to create a plan going forward with you. The initial meeting is an important one for your consultation because it gives you a perspective of how this person chooses to work with clients and is your chance to ask questions about your next steps.
Many people might have overlooked the long-term implications of the Tax Cuts and Jobs Act. This 2017 act, however, has marked a real change from previous estate tax planning towards lifetime planning.
There are major opportunities to mitigate estate tax liabilities by gifting wealth and assets outright to beneficiaries or giving them to a trust for the benefit of future generations. This is due to the increase in exemption amounts or GST gift and federal estate taxes.
These gifting opportunities present an annual chance to consult with an experienced estate planning lawyer about what is recommended in your case and how to use these strategies in what appears to be an ever-changing estate and tax planning environment. You deserve to have the input and advice provided by an attorney who remains competent and knowledgeable about all current issues in the estate planning realm.
The start of a new year is a great opportunity to reconnect with your estate planning lawyer and to discuss how changes in your estate planning can have positive impacts not just for you in the short term, but also for your loved ones and beneficiaries over the course of a long run. An estate planning lawyer is there to advise you as plans and goals change over the course of your life and to keep your estate plan updated and in line with those needs.
It’s easy to get emotional about money, especially if you have spent much of your life working towards establishing and accomplishing financial goals. As your goals change through the various phases of your financial life, you will shift from accumulating assets to figuring out how to protect them and to distribute these to your loved ones if and when something happens to you.
Managing your money with logic is easier said than done because there’s no doubt that you’ll have some emotional connection to the financial aspect of your life. Unfortunately, headlines from the news can make it nerve wracking to approach financial management with logic rather than emotion.
Focus instead on your individual goals about how much you’ll need to live comfortably in retirement as well as pay down your debts. Projecting your retirement income based on Social Security and your current savings can give you an update about when you need to make adjustments and retool your plans for the future.
Figure out how much you need to invest and save to meet your goals and then focus on execution. Keeping your focus on the most important issues for your individual needs can help you to avoid being distracted by scary news stories and predictions about what might happen in the financial markets. You are better off partnering with a team of experienced financial and estate planning professionals who will work hard to keep you advised of what you need to know and when and how you need to make adjustments based on shifts in the law or other aspects of life. Regardless of your overall financial planning goals, you need to have a team of people who is familiar with your individual needs.
Planning ahead for your future retirement and estate planning goals
might lead you to question whose name is listed on the deeds to homes.
Sometimes it can be the right decision to put your home into your
children’s names, but this can also create grounds for family conflict and
problems if you have multiple children.
One major reason to think carefully about putting your home in your
children’s name is the potential for you to need Medicaid in the future. You
could face a five year look back if you have a need for Medicaid for any time
in the near future.
When you attempt to get support through the Medicaid program, assets
that you gave away to your loved ones during the preceding five years could
still be classified as yours, making it difficult for you to qualify for
If your children wait to inherit the house, you will pass along possible
financial issues for them, including a new cost basis valued at the time of
your death. If they were to choose to sell the property shortly after that,
they would have no taxable profit.
Other issues can emerge if you pass on the title to your home, since
your property could become involved in their problems if there is a financial
claim, divorce settlement, or lien placed on the property, since they would own
a share of your home. A lawyer who specializes in estate planning can give you
more specific advice about whether or not putting your home in your children’s
names makes sense.
Selecting someone to serve as a trustee over this popular estate planning strategy is important because this individual might have regular and ongoing contact with your beneficiaries and loved ones.
As a result of this direct contact and the need to have open minds of communication between beneficiaries and trustees, it’s a good idea to appoint someone who is familiar with all the roles that they must play in serving as a trustee.
If your beneficiaries are likely to be dependent to some degree on the trustee for support, it is even more important that you select someone that everyone is comfortable with.
Most people will have someone in their family who possesses the skills to be an effective trustee. The more dependent the beneficiary will be on the trust, however, the more independent that trustee should be.
A trustee and beneficiary’s relationship is forever altered if there are problems in the disbursement of funds or disagreements over the relationship in terms of the trust. This relationship can be forever altered and not always for the better if you select someone who is not independent from the trust itself. This can lead to difficult family conflicts and even possible litigation and is a leading reason why you might want to choose an independent party to serve as your trustee.
A power of attorney document enables someone else to make decisions on your behalf when he or she is installed as the agent. If you sign a power of attorney, you are called the principal.
In many instances, an appropriately drafted durable power of attorney can avoid having to go through additional court procedures such as a conservatorship or guardianship and will instead empower the financial agents that you select while still of sound mind to make decisions for you when you are unable to do so. This is your primary role in establishing a power of attorney, but you must also think about whether or not you want this power of attorney to be only for specific actions or to occur after a specific event, like you becoming incapacitated.
The agent of your power of attorney is also referred to as the attorney in fact. Without an appropriately executed power of attorney, if you were to become mentally disabled and unable to make your own decisions, your loved ones would have to go through the additional court process and payment of obtaining a probate court-supervised conservatorship to have an individual handle your financial and property affairs.
While no one wants to think about the possibility of not being able to make their own decisions, it could be a big mistake to avoid planning for this altogether because your loved ones would be the ones who end up paying the price. Schedule a consultation with an experienced estate planning lawyer to discuss to find out how a power of attorney can help you.
Do you have specific wishes or rules you’d like to place about inherited wealth? An independent and professional trustee might be the right choice as you select and fund your trust.
A professional trustee who is familiar with all of the requirements of him or her can deliver consistent, unbiased and prudent administration of trust assets across multiple generations. An independent professional trustee is far more likely to respect and apply strict application of your trust terms.
There are many different reasons for this but a professional trustee will have internal and external audits and management oversight and written policies and procedures to guide his or her performance in this role. All too often, professional trustees are only sought out after a family has self-destructed due to a previous trustee who didn’t work out.
While a professional trustee might not be able to help to prevent all possible disagreements, the probability of family conflict and problems between beneficiaries and trustees can be dramatically reduced by selecting an independent trustee. The professional trustee must be engaged and have the capacity to work closely with the family to fulfill the many duties and respect the terms of the trust.
The laws are generally not very strict about who can serve in the important role of a trustee or administrator of your established trust. However, some careful thought and consideration should go into this process. The legal requirements for a person to serve as a trustee require that he or she be over 18 years of age, is capable of managing their own affairs, and are legally competent.
As a factor in selecting your own trustee, the primary consideration should be choosing a person who is trustworthy. The trustee has a responsibility to act in the best interests of the beneficiary.
While your trustee does not have to have specific financial or legal expertise, you must be sure that this person has relatively good judgment and understands the terms of the trust. Federal benefit program knowledge should also be a factor to look for when selecting a person who will help to administer a special needs trust.
Furthermore, you must be aware of the possibility that a trustee might have to manage the trust for a long period of time. This means your selection of trustee should be a person who will likely be around for quite a while and has the time and ability to devote to trustee duties.
This individual has to be of sound mind and body. An independent trustee might be a better selection for you because this is an institution or individual who has no direct interest in the trust.
Common examples of independent trustees include investment bankers, professional trustees, a bank or a trust company, an investment advisor, a lawyer or an accountant. This individual will be independent but will also likely have the benefit of being familiar with trust administration.
Two key individuals might be installed as part of the management of your estate plan either during life or after you pass away. These are known as your executor and your trustee. These are individuals who implement your plan after it has been articulated in estate planning documents. Both of these individuals often determine the overall success of your estate plan or the trust.
Unfortunately, not enough people give careful consideration to these appointments. Even if you care for and made these appointments, the death of one of these individuals or changing circumstances for either person might call for an update to your estate planning.
Are those individuals originally appointed in your estate plan as an executor or trustee still comfortable, able and willing to perform these jobs as you wish for them to be carried out? Is another person a better choice because your estate plan has changed? Or has someone moved away, passed away or aged?
Determining who is the best choice as a trustee or an executor requires thinking about who should serve in these roles today. If you believe that it’s time to update your estate plan, only do so with the help and guidance of an experienced and knowledgeable estate planning lawyer. You could otherwise expose yourself to unnecessary mistakes and problems.
So you’ve already made the decision to use a trust as an estate planning strategy to shield assets from potential creditors or predators, to add a layer of privacy to the management of your estate plan and to exercise some level of control over how assets in your estate are passed on.
This is an important first step in the process but you might also need to give a careful evaluation to who you choose to serve as the trustee. While a family member might have the necessary skills to step into this role, a family member is not always the right choice.
Typically speaking, an independent professional trustee is much likely to follow the terms of your trust to the letter. This is because they will have internal and external audits, management oversight and written procedures and policies outlined by you. Professional trustees also have tended to serve in these roles before and are familiar with what is required of them as well as the lines they cannot cross in performing their role.
An independent professional trustee can minimize the possibility for conflict when they are not immediately related to anyone who is receiving benefits or assets inside the trust. A professional trustee will also understand that any monies left inside the trust do not belong to the trustee and should be comfortable in working in a close capacity with your loved ones to manage the disbursements of funds and handle communication professionally.
Establishing a power of attorney enables another individual to make decisions on your behalf. Depending on the specifics of your unique concerns, a power of attorney can be tailored to particular situations, such as when you become incapacitated or can exist from the moment that it is signed.
Revoking a power of attorney raises unique legal questions. Many people who have established a power of attorney might be curious about whether or not they can set up a power of attorney and ultimately take it back in the future, particularly if they no longer trust the individual who is established as the agent or if that person no longer wants to serve.
A power of attorney document can be revoked if the principal executes a written document identifying the power of attorney and requesting that it be revoked. The attorney in fact or agent who has been established with the power of attorney also must receive actual knowledge about the revocation. Until he or she gets that actual knowledge, the revocation does not become effective.
Sending the revocation letter via certified mail with return receipt requested is strongly recommended and it is a good idea to follow up and ask whether or not a power of attorney revocation has been received by the agent. This information is important for carrying out the full revocation of a power of attorney and verifying that you are eligible to establish a new power of attorneyas soon as possible.
You need to have three clear phases to the business succession planning process to ensure that you have considered all aspects and are as prepared as possible to pass your business on to a future generation.
Phase One: Creating A Clear Vision
Setting up measurable goals within your succession plan and aligning them with company values are important. This can have critical implications for the success of your company now and going into the future. Make sure that you are preserving not just the financial health of the company, but also its reputation and principles. These determine the many different issues in your own life including estate and tax planning strategies, financial issues, retirement and transition concerns. Make sure that you use a strong team of advisors who is familiar with business succession planning to accomplish these goals. After all of the data about the current state of your business and where you’d like it to go have been assembled, you can begin to create a strategy.
Phase Two: Building Your Management Team
Tapping into the talent already existing within your business goes beyond simply thinking about whether you should pass on the business to a child.
Many businesses do no survive with family succession plans especially if you have not talked to your child about taking ownership of the business because he or she might not be interested in the manner that you expect. Building a senior team that helps you to manage all the critical areas of your business will empower this next level to take over the company by working in a supervisory rule first. Your business succession plan should have methods to guarantee that valued employees will stay on their position upon your death, disability or retirement. An employment agreement can clarify this.
Phase Three: Put Together Your Estate Plan
Any succession plan is not complete without an estate plan. One of the primary concerns might be how to treat all of your children equally in the succession process, particularly if you have non-business assets. Make sure that you talk through your choices and consider using tools such as a shareholder agreement or buy/sell agreement with any other business owners.