December, 2019 | Shah & Associates, P.C. Estate Planning & Elder Law Blog
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Don’t Lose Track of Assets in Your Estate

December 31, 2019

Filed under: Estate Planning — Laura Pennington @ 9:15 am

You might take steps to list everything you can inside your estate, but it’s still possible to leave items out. When you’re working to help administer someone else’s estate or thinking ahead about your own, it could be the case that not every asset is accounted for in a trust or a will.

Some assets won’t ever fit inside those estate plan vehicles anyways. These include life insurance plans, individual retirement accounts, and 401(k) plans. It’s all too easy to forget something like a former spouse still being listed as the beneficiary on a life insurance policy.

In the U.S., we’re seemingly adding new assets to our estate all the time, especially when it comes to digital materials. You’ve got photos, online accounts, and plenty of passwords stored up in your computer. But have you thought about who will have access to those if you pass away?

Most people’s first thought when they acquire something new or start a new online account is not to add it to their estate plan. But sitting down once every six months or at least once a year gives you a clear chance to review everything you have and to determine if you need to update any of your other materials.

A lawyer can be essential in helping you walk through this process so that you can avoid some of the most common pitfalls and ensure that you’ve done as much as possible to make things easier for your loved ones.

When it comes to the fluid process of estate planning, you don’t have to put all the hard work of asset tracking on your own. Be prepared regular updates so that you get the peace of mind that your loved ones will be set up for their own future thanks to your hard work.

Got 2020 Financial Goals? Don’t Skip These

December 30, 2019

Filed under: Estate Planning — Laura Pennington @ 1:52 pm

The end of the year is the perfect time for reflection. If this year didn’t add up to all you’d hoped it would be and you want to start off on a better foot in the New Year, there are at least four goals you can’t afford to miss on your list.

Start by looking at your biggest debt, which is probably your home. Even if you know that it’s not feasible for pay off that mortgage totally in 2020, having a future date in mind when you do think that goal is achievable gives you something clear to work towards. If you’re nearing retirement age, factor in how this might influence your retirement spending, too. Can you target a payoff date early on in your retirement?

The next phase should be setting up a six month emergency fund. This is money you can tap into during a worst case scenario like a critical home repair or a sudden medical bill. Most people in the U.S. have no emergency savings fund at all.

The third phase to accomplishing your financial goals in 2020 is creating a full plan for how to look at your big financial picture. If you’re concerned about running out of money in retirement or whether you’ll need long-term care, the best time to put a place in motion for these issues in well in advance of an emergency situation.

If you are a few years away or even a decade away from retirement, expand your debt payoff plan from beyond just your home. Think about car payments, student loan debt, and credit card debt. All of these can create big expenses when you’re on a fixed income in retirement and don’t want to dip into your emergency fund or your overall savings to pay for regular costs.

Need help fitting your financial plan with your estate plan? Now is a great time to schedule a chance to speak with a dedicated estate planning lawyer about your options.

Is Talking About Estate Planning Going to Cause a Fight in Your Family?

December 23, 2019

Filed under: Estate Planning — Laura Pennington @ 9:15 am

Getting together for the holidays or to celebrate the new year gives you a great opportunity to reconnect with your loved ones. But if one of the things on your to-do list this year is to discuss estate planning arrangements, you might be concerned about the possibility for conflict.

The good news is that there are delicate ways to handle this situation to decrease your chances of ending up in an argument with your loved ones. Estate planning is a very personal and individualized process, which means that the great deal of thinking you might have put into the process, won’t necessarily translate to your loved ones. And yet, planning before disability or death is one of the best gifts that you can give your family.

Many family members are embarrassed to discuss the topic of money, but might miss out on beneficial financial strategies like putting together trusts. If you’re thinking about using a trust as one of your estate planning strategies, however, you can increase your chances of success by communicating your financial values to your children early on.

When you have a conversation about trust and estate planning, approach this topic with care and respect. Be both considerate and candid. The next thing to consider is to rely on the insight from a knowledgeable estate planning attorney to verify that your estate planning is customized to the goals you intend to accomplish.

The investment that you spend in putting together an estate plan, especially involving a trust can payoff in spades for your loved ones when they understood why the trust was being used and when you have properly funded it. Schedule a consultation today with a dedicated estate planning lawyer to talk through more benefits of trust funding.       

How Do I Break the News to My Kids That I’m Not Planning to Pass On Assets to Them?

December 18, 2019

Filed under: Estate Planning — Laura Pennington @ 2:29 pm

Deciding to disinherit someone in your family is fraught with emotional considerations and concerns. Wondering whether or not you should inform the family member about your intention to exclude them from your estate planning can be a very difficult question to answer and one that you should discuss directly with your estate planning lawyer.

An estate planning attorney can help you put together the relevant strategies and tools to ensure that your estate planning goals are accomplished. In the event that you decide to inform your children that they are not receiving an inheritance, this conversation should be handled with care.

One common reason to decide not to pass on an inheritance to your children is because you believe that your money could serve a bigger and better purpose in your community. This doesn’t necessarily mean, however, that your loved ones will understand this decision that you have made.

If you intend to leave your assets behind to someone other than your family members, it’s important to communicate that plan now if you feel confident in your decision. Fleshing out your plan with your loved ones does allow them to be a part of the process, and ensures that you leave behind funds to pay for your final expenses. The last thing you want is to become a burden for your family financially.

You might need to adjust your estate plan in the future if you change your mind. This is why having an established relationship with an experienced estate planning lawyer can make this process easier. Explain to your children your reasons and decisions behind opting to pass on an inheritance or assets to other organizations or people than them.

This clears up expectations, but it doesn’t mean that this conversation will be easy. Discussing your missions, values and goals for your assets after you pass away can help your loved ones better understand the decision you’ve come to.        

The Difference Between Trusts and Wills

December 17, 2019

Filed under: Estate Planning — Laura Pennington @ 3:12 pm

Do you know how to decide whether or not you need a trust, a will, or both? Most people partner with an experienced estate planning lawyer when putting together their strategy for their estate.

A lawyer can help you review existing estate planning documents and help you decide what assets will be passed through a trust versus your will.

Attorney Neel Shah recently shared the difference between a will and a trust with the Tribune. He says, “A will is like leaving your family a recipe to bake a cake after you’ve passed away.” In this analogy, someone in your family would have to go buy the ingredients to make the cake and prepare them in the right order.

Putting together a trust, however, allows you to make the initial recipe while you’re still around. When you create a trust, you’d control how the cake is made and then you can decide who you’ll share this with through your trust.

One common reason people turn to a trust is because you put in the work today to make things easier for your loved ones in the future.

Even though a will might be easier and faster to put together, a trust equips you with more control and the flexibility many people prefer. With the added layer of privacy afforded by a trust, you also get peace of mind that your plans will be kept private between your trustees and your beneficiaries alone rather than becoming a matter of public record.

Are You in The 66% Of Americans Who Don’t Have This Estate Planning Document?

December 16, 2019

Filed under: Estate Planning — Laura Pennington @ 3:44 pm

Far too many Americans overlook the potential benefits of estate planning because they believe it’s too difficult, not necessary for their specific situation or too expensive. But there can be major costs to ignoring components of your estate plan. Most people are familiar with the benefits afforded by a will, but a new study shows that up to 66% of Americans don’t have a healthcare directive.

A healthcare directive is a legal document in which you lay out your decisions for caregivers in the event that you suffer from dementia or another similar ailment.

It can also provide important guidance around whether or not you want life-sustaining care. Healthcare directives sometimes go under other names depending on your specific location, including medical directives, living wills, or durable health care powers of attorney.

In general, most of these documents serve the same function to provide direction and guidance around how the death and medical decisions affecting you should be made. Health care directives are truly a relatively new legal document because they only came into existence in 1976 in California when the first law was passed enabling health care directives.

By 1992, however, all 50 states across the country had similar laws. Make sure that you have incorporated your intention for a health care directive into your estate planning by sitting down and consulting with an experienced and knowledgeable estate planning lawyer.       

Key Players in an Established Family Trust

December 11, 2019

Filed under: Estate Planning — Laura Pennington @ 3:06 pm

Have you thought about using various estate planning strategies, such as a trust, to establish some level of control and clarity during your estate planning process? The establishment of a family trust might be one specific way in which you intend to accomplish this goal.

There are several different key players involved in the establishment of a family trust, including the creator of the trust who is most often the person who possesses family wealth and has established an estate plan for the benefit of his or her family.

In addition to the trust creator, there are the beneficiaries of the trust who are typically the grandchildren or the children of the trust maker or settlor. These beneficiaries are the recipients of assets inside the trust in alignment with the terms established in the trust itself. Additionally, there are other parties, such as secondary beneficiaries who are eligible to receive the trust assets in the event that some even occurs that triggers the passing of assets to another generation, such as if the primary beneficiary has passed away. The final key person involved in the management of a family trust is the trustee who manages or oversees the operation of the trust and directs assets inside the trust in accordance with the settlor’s instructions when the trust was established.

One party who might also become eligible to trust assets is a non-beneficiary spouse, i.e. someone who is married to a beneficiary in the trust. Many families using the family trust will engage in the process of asset protection planning to attempt to minimize the possibility that a soon to be ex-spouse will be able to tap into those assets.       

What’s Your Big Purpose for Succession Planning?

December 10, 2019

Filed under: Estate Planning — Laura Pennington @ 1:58 pm

If you own a company, you can’t afford to think just about the day to day. In fact, even planning ahead for your own company’s future while you are still involved might not be enough to protect your business from success long into the future. This is because you can’t afford to neglect the power of a process known as succession planning.

Succession planning refers to the process for developing, identifying, hiring and training new leaders who are eligible to replace older leaders when those leaders retire, pass away or leave. This process greatly increases the chances of capable and experienced employees being able to step in and assume these roles as they become available.

There are many different facets involved in succession planning and this process is most successful when it is implemented many years in advance of an owner thinking about leaving. This is because there are many components to establishing a leadership and transition plan and identifying and training the proper timeline to take over the company.

Organizations use succession planning as one process to ensure that the right employees have been recruited, developed, and trained to fill key roles within the company. Top talent employees should then exercise their skills, abilities, and knowledge to be prepared for a promotion and advancement into increasingly more challenging roles.

This gives the owners of the business and other key employees who are planning an exit in next several years the peace of mind that someone is there to step in to these important roles as needed in the future. If your business has not yet incorporated a succession planning into its long range goals, schedule a consultation with an experienced business succession planning lawyer today.       

Don’t Forget Your HIPAA Authorizations in Estate Planning

December 9, 2019

Filed under: Estate Planning — Laura Pennington @ 2:46 pm

In the event that you become incapacitated, it will be important for anyone you have named as a power of attorney agent to be able to make decisions on your behalf.

If you are incapacitated, you are unable to make these decisions for yourself, but without appropriate estate planning documents, appointing someone else to do this, this can create confusion, chaos or even court hearings for your family members.

It’s important to also think about how the Health Insurance Portability and Accountability Act known as HIPAA limits disclosure, release or use of any individually identifiable health information.

Power of attorney agents and a legal heir could be eligible to get access to this information in order to use it to act on your behalf. However, even though there might be other people that you want to be informed about your current health status, it is important to include these people in your estate planning process.

For example, if you have a significant other to whom you are not married, that person is not necessarily entitled to automatically receive information about your health status. If your parents are approved to receive information about your health status, but do not have a good relationship with your significant other or are unlikely to inform your significant other about current condition, this can generate problems.

Make sure that you think about who else should be included as a power of attorney agent when establishing your estate planning documents.          

Are Your Retirement Plan Contributions Up to Par?

December 4, 2019

Filed under: Estate Planning — Laura Pennington @ 9:15 am

The end of the year will quickly be here upon us. Many people have already started their holiday planning, but you can’t afford to neglect the opportunities that come with the burst of momentum to knock things off your to-do list and plan ahead for a successful 2020.

Yearend financial planning sets you up for success throughout the entire next year. Now is an excellent opportunity to review all of your key beneficiary designation forms and other documents in line with your estate plan. But don’t neglect the opportunity to establish a better and deeper understanding of what’s going on with your retirement contributions.

Now is a great time to evaluate whether or not you’re on track to max out your retirement contributions for the year. Whether you have an SEP IRA, a 401(k) or a 403(b), you might need to change how much you contribute if your plan allows for it. Think about any holiday bonuses that you might receive and these might be put into the plan as well. The contribution limit for your IRA for 2019 is $6000, but this jumps to $7000 if you are aged 50 or older.

This could be a good time to sit down with your financial professional to discuss setting up a Roth IRA by transferring your traditional IRA funds. All qualified withdrawals and future gains would be tax free even though you would pay taxes on the amount that you do convert.

For more information about getting ahead of your planning and tackling your financial goals before the end of the year, don’t neglect the opportunity to sit down with your estate planning attorney.      

Leveraging Your Charitable Giving Before and After You Retire

December 3, 2019

Filed under: Estate Planning — Laura Pennington @ 1:53 pm

There’s a good chance that if you’ve been active with philanthropy and charitable giving, that it’s been a part of your life for as long as you can remember. But it might be time to adjust that strategy before and after retirement after speaking with a knowledgeable and experienced estate planning attorney.

An estate planning attorney can help you to navigate this process and ensure that you have the information you need to leave a lasting impact on the charities of your choice.

Making the most of charitable gifting and giving can require some advanced strategy and the best way to give to charity in a tax intelligent way might depend on your age.

Effective tax planning can also give you peace of mind that a bigger portion of your donation has gone towards supporting the philanthropic goals and priorities that are most important to your family.

Many more families today are taking the standard deduction than ever before as a result of the Tax Cuts and Jobs Act. This means that fewer families are eligible to qualify for tax benefits from cash donations to charity. These strategies will depend on whether or not you’re required to take distributions from an employer sponsored 401(k) or an individual retirement account.

For those donors younger than age 70 and a half, appreciated securities can be a powerful way to support the charities you care about. Once you have reached age 70 and a half, under the new standard deduction, one of the best strategies is to gift a portion of your RMD or all of it to a charitable organization as a qualified charitable distribution. QCDs cannot be greater than $100,000 but can still be very powerful strategies for gifting to a charity you care about. Schedule a consultation with an experienced estate planning attorney today to learn more.       

Keep a Formal Will Even as Electronic Wills Are Coming

December 2, 2019

Filed under: Estate Planning — Laura Pennington @ 9:15 am

Most of your organization today is probably digitized. There’s a good chance you own a scanner and have taken every effort to store what you can online.

Signing Last Will and Testament document

But even though electronic wills might be a wave of the future in estate planning, they’re not here in full yet since most states don’t have a method for electronic will filing.

A true electronic will is one that can be drafted, reviewed, and validated all in electronic form. As of right now, e-wills don’t eliminate the current need for a traditional will. Over time, however, state legislatures might review the requirements for electronic wills to provide insight about how this might work.

It’s very likely that future versions of an electronic will still require the formal creation of the document as well as signatures by witnesses. Some state courts have already begun to analyze and recognition electronic wills, but those circumstances are limited up to this point.

Recently, the Uniform Law Commission has accepted an e-wills act known as the Uniform Electronic Wills Act. This organization is a group of legal professors and practitioners who are often the first voice of change in various practice areas. Many states tend to adopt similar laws after the ULC releases information about laws they’ve accepted.  

If you’d like to talk about how to create a will that works for your life circumstances now and in the future, set up a time to speak with an experienced and dedicated estate planning lawyer. A lawyer can guide you through how to incorporate the most appropriate estate planning strategies for your needs and your family.