November, 2020 | Shah & Associates, P.C. Estate Planning & Elder Law Blog
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What to Know About Estate Planning When There’s an Addict in Your Family

November 20, 2020

Filed under: Estate Planning — Laura Pennington @ 4:40 pm

Having an addict in your family can be a very difficult situation and this can prompt numerous concerns around the process of estate planning and naming someone as a beneficiary who might not be in a good position to receive or use funds. Creating a written revocable living trust, naming the person in question as a beneficiary can be one way to accomplish your estate planning goals and still protect that person.

You can require, for example, that the trustee make any necessity related payments directly to the provider rather than cash being given to the beneficiary. For example, this might include a mortgage company or a landlord or a health insurance company. You can set aside specific standards for the trustee of the account regarding disbursements.

Some of the most common categories that you can authorize for the trustee include maintenance, education, health and support. This leaves enough room for the trustee to make some discretion but can also require some certain level of standard of living or other needs.

Include a provision that will name the entity or person who will be eligible to receive any funds remaining in the trust if the family member in question were to pass away. These are complicated and important issues to consider from an estate planning perspective. These should always be discussed with a trusted and knowledgeable estate planning lawyer.       

Can You Remove an Executor?

November 19, 2020

Filed under: Fiduciary Duties — Laura Pennington @ 5:02 pm

An executor is appointed to close out the affairs of a deceased person. The last will and testament is used to name the executor, but if one has not been named or no will exists, the court needs to appoint a person in this role.

An executor has what is known as a fiduciary duty. This means they must uphold the interests of the estate and the associated beneficiaries above their own interest. A violation of this could lead to the removal of the executor. Anyone appointed in this position should know that they have this legal obligation and be fully prepared for what it means to have this responsibility and duty to the estate.

If you are an interested party to an estate and believe that the current executor has violated the law or the ethical rules surrounding this role, you might be able to ask the court to remove them from this position. This is a serious matter and claim and one that should not be undertaken lightly.

If you suspect that a fiduciary duty has been breached, it’s best to try to make sure this isn’t a misunderstanding first. In order to ask that the executor be removed, the person must be an interested party to petition the court and ask the judge to remove that person.

You must be able to show a valid reason for why you’re making this request, such as misconduct or incompetence. Simply because you are frustrated with actions the executor took legally does not mean you have met the legal grounds to pursue a claim to get them removed. You might want to meet with a probate lawyer to discuss whether or not any violations occurred. All beneficiaries have to be notified when a petition is entered to have an executor removed and the court will review the claims to determine the course of action.

Should You Convert Retirement Accounts for Tax Planning Purposes?

November 18, 2020

Filed under: Estate Planning — Laura Pennington @ 12:23 pm

Do you have a goal of keeping current family money in the family when you pass away? There are several different steps to accomplish in this, each of which can be discussed with an estate planning attorney. 

A person who has a current 401(k) or IRA account could accidentally leave behind not just the assets inside the account but a significant tax bill. There’s an income tax liability, for example, that comes with children inheriting that IRA.

This is because regular income tax has to be paid on distributions from all traditional retirement accounts in the United States. In the past, your heirs had the opportunity to stretch distributions received from this fund over the course of several years to reduce their overall tax burden.

However, the account now must be liquidated within ten years after the death of the primary owner of the account. You might need to think about whether or not converting traditional accounts to Roth accounts, which have tax free distributions, makes the most sense for your family.

For more information about this and to decide what other assets need to be involved in your comprehensive estate plan, it is best to sit down with an estate planning attorney and to create a comprehensive inventory of all of the assets and debt associated with your name. This can help you begin to answer some of the most important and difficult questions around the estate planning process.      

What Happens If Your College Age Child Gets Sick?

November 9, 2020

Filed under: College Planning — Laura Pennington @ 3:49 pm

This is a question you might not have contemplated until the pandemic raised concerns about health all over the United States. It’s come front and center for those parents who have a child who has either gone off to college for the first time or returned to campus for the first time since the pandemic started. No matter which of these applies to you, have you done estate palnning with this adult child before they left?

Given that it’s unknown what campus life next semester will be like, it’s a good idea to do everything you can to plan ahead and prepare. Getting the call that the school has a big spread of COVID or that your child is sick and needs to return home are real possibilities for parents in the next year, and estate planning can help to answer some very important questions during this time of uncertainty.

If you have a college age child, it may be important to create estate planning documents specifically for this purpose. If your child is away at college, you do not necessarily have the authority to make medical decisions on their behalf unless you have been specifically granted this legal authority in a power of attorney document.

A durable power of attorney document can be used when signed by your adult child stating that you are able to make care decisions on their behalf if they become incapacitated as a result of covid or any other medical condition. Without these documents you do not have the authority to act even if your child just turned age 18 yesterday.

During this period of transition when your newly legal adult might still have strong ties to home and rely on you for support in these important decisions, it’s critical to think about how these documents could help you avoid difficult situations.       

   

Do You Know These Three Trust Parties?

November 3, 2020

Filed under: Trustees,Trusts — Laura Pennington @ 2:30 pm

The establishment of a trust is usually a more advanced form of an estate plan and it requires at least three parties, some of who may be served by the same person. The first party to a trust is the person who creates it known as the creator, settlor or grantor. The second party to the agreement is the trustee. This is a person who has legal title to the property and the trust and manages the property according to the terms inside the trust agreement as well as applicable state laws.

In many cases, when the title to the property must be recorded, it is listed as in the trustee’s name not as an individual person but rather as the person trustee of the X family trust. The third party to a trust document and strategy is the beneficiary. This is the person who benefits from the trust and multiple beneficiaries can be on a trust at the same time.

There can also be different beneficiaries over time. Sometimes an individual might be known as an income beneficiary, meaning that they earn interest and dividends in income on the trust. Other beneficiaries can be remainder beneficiaries, which means they will get what is inside the trust after previous beneficiaries pass away or those rights expire.   

Creating a trust can be a key aspect of your estate planning, but it only makes sense when you have worked directly with an estate planning lawyer to select the right kind of trust. Given that you can accomplish many different goals with a trust, you want to choose the right one and fund it properly to get all the benefits.

What Makes Elder Law Distinct from Estate Planning?

November 2, 2020

Filed under: Baby Boomer Generation — Laura Pennington @ 3:19 pm

What happens to your assets as you get older is of chief concern not just for estate planning purposes but also for your own elder law planning. The key differentiating point between estate planning and elder law is that elder law professionals look at the holistic process and consider how your key documents and assets can be used to support you throughout your life as well as your chosen beneficiaries after you pass away.

An elder law attorney will sit down with you to look at all of your unique circumstances and can assist you with the creation of estate planning documents, such as trusts or wills, but can also help you answer key questions around what your needs might be with regard to medical costs or long term care needs down the road. Experts in elder law will be familiar with many different concerns associated with aging and will have worked with many other clients in similar situations to help you avoid common blind spots.

A consultation with an elder law attorney can be extremely beneficial if you do not yet have an estate plan and have questions around what your estate plan should include. Given that many Americans are living longer than anticipated, you need to have more than a retirement plan to guide you into older years. Set aside time to speak with an elder law attorney about your distinct needs and how you can accomplish your goals.