Articles Posted in Estate Planning

Celebrity estate stories are rife with lessons about mistakes to avoid when creating an estate plan, such as problems with the estates of James Gandolfini, James Brown, and Anna Nicole Smith. Poor estate planning can lead to probate, taxes, and family disputes. Failing to create an estate plan or drafting a poorly written plan can lead to many issues for your loved ones after you pass away, but there are some mistakes that you can avoid in order to minimize the chances of problems in the estate planning process.

Mistake #1: Thinking You are Too Young or Possess Too Little

In 2012, a report from Texas Tech University revealed that only around 54% of all Americans possess an estate plan. Many do not create a will or other estate planning documents because they believe that they are too young or do not possess enough to warrant a will. However, a good estate plan does not just pass your assets to your loved ones when you die; it can also protect you while you are alive.

The White House has come forward and stated that President Barack Obama’s advisers would recommend that he veto pending bill, authored by Republicans, which would repeal the federal estate tax. A veto on the bill could happen as soon as Thursday, although experts believed that it stood little chance of becoming law. Democrats in the federal legislature and other lobbying groups all disagree with the repeal of the federal estate tax because of the damage that it would cause to the federal deficit.

Repealing the Estate Tax

Known by its opponents as a “death tax,” the federal estate tax reaches as high as forty percent on estates valued at more than the federal exemption level, $5.43 million for 2015. The tax is applied to the value of the estate that passes the $5.43 million mark unless it is protected through other estate planning means like trusts, retirement accounts, and the like. Proponents of the bill repealing the federal estate tax claim that it only serves to unduly burden grieving family members. However, the White House has said in a statement that it disagrees.

The White House administration is pushing for legislation that would make it harder for retirement fund brokers to push higher fee mutual funds or other expensive products to people who are trying to save for retirement. The plan, issued by the federal Labor Department, would require brokers to act in the best interests of their clients, which is a change that could drastically affect the earnings of financial advisers in the handling of retirees’ funds.

Old Brokerage Rules

President Obama said that the current regulations regarding brokers are out of date and come from an age where employees could rely upon a pension from their employers. “Financial advisers absolutely deserve fair compensation,” the President said, “But they shouldn’t be able to take advantage of their clients.” Under the current rules, brokers can sell any financial product that they deem “suitable” for an investor, which means that it fits the client’s needs and financial risk.

When a couple is getting married the last thing that they are typically worried about is estate planning. However, once the honeymoon is over you should sit down with your new spouse and update your individual estate plans to reflect the new status of your marriage. The following tips are a good place to start when combining two individual estate plans into one.

Visit the HR Department

Nowadays, your employer typically handles your retirement accounts and life insurance forms. Once you have been married, you should visit your HR department to update the beneficiary forms for these documents to include your new spouse. Beneficiary accounts are different from other assets in an estate, so if the beneficiary is left as someone different the value of the account will go to them and not the spouse.

Living and working abroad while maintaining your United States citizenship can add a layer of complexity to the estate planning process. International property, assets, accounts, taxation, and other issues that can affect estate plans must be considered that normally do not complicate the estate planning process. If you expect to be working as an expat, consider looking into the following issues for your estate plan before you go.

Review Your Estate Plan

It may seem basic, but review your estate plan before you go abroad. Update any necessary documents or beneficiary forms before leaving and make sure that everything is set with your attorney in the United States before going abroad. It would also be helpful to review the interactions between the U.S. legal system and the laws where you will be going to so that you can understand how your estate plan may be affected by the move.

A lot of people who are saving for retirement prefer to use Roth IRAs as part of their retirement plan. This after-tax income can go a long way in retirement, but annual contribution limits can place a constraint on how much money can be saved. Fortunately, there are “back door” options for funding a Roth IRA that get around the contribution limits and allow the account to grow more quickly. One of the fastest growing back door options is using the funds in an employer-sponsored 401(k).

401(k) to Roth IRA Strategies

An employer-sponsored 401(k) account is mainly used to defer the traditional pre-tax contribution limit. For 2015, the limit is $18,000 or $24,000 for employees over the age of fifty years old. However, some 401(k) account holders have started to use the after-tax contribution limit as a way to contribute to a Roth IRA. This system works because the after-tax limit for a 401(k) allows the client to defer money than the pre-tax limit, which for 2015 is a total of $53,000.

In a bizarre care, a woman in New Hampshire admitted in court that she told police that she dug up her father’s grave in search of his “real will” but was rewarded with only vodka and cigarettes. Melanie Nash, 53, pleaded guilty last week as one of four people who opened her father’s vault and rifled through his casket last May.

According to the prosecutor, the scene was reminiscent of an Edgar Allen Poe tale. Ms. Nash believed that she was unjustly shorted out of her part of her father’s estate when he died in 2004. She did not receive anything when he died and had been thinking of digging up her father’s grave for years to try and prove that her sister hid the will in his casket. Her sister, Susie Nash, has always maintained that there was only one will created in 1995 along with the rest of the estate planning documents and that everyone involved in the process knew about it.

In Search of the Real Will

A Florida Court of Appeals sorted through a complicated question of bank accounts and estates in a case at the end of last year. This case illustrates the complexities of banking law and administering estates in addition to the importance of reviewing the state law regarding estate administration before creating an estate plan.

Facts of the Case

In the case of Brown v. Brown, Elizabeth Brown died in 2007, leaving behind six adult children. She had an estate plan in place that distributed several specific bequests and left the remainder to be distributed equally amongst her children. She named one of her children as the executor of the estate, and he filed this lawsuit against one of his siblings, Joseph.

The first part of this article dealt with tips to keep in mind when helping an aging loved one with estate planning matters. This included watching for waning mental capacity, exercising any necessary swap powers, reviewing trust principal distribution standards, adjusting the timing of any charitable gifts, amending family limited partnerships, and providing for any shifts in the trust situs. This section of the article discusses tips to keep in mind after your loved one has passed in order to derive the most value possible for the heirs.

Tips for After the Passing

In addition to looking out for an estate before a loved one passes, you should also keep in mind what is important after they pass away. There are many different opportunities available to ensure that the heirs of the estate also get as much value as possible that their loved one wished to pass on. Issues that can arise after the passing of a loved one can include:

Estate planning lawyers agree that there has been a fundamental shift in their clients’ estate planning concerns over the last couple of decades. There has been less worry about estate tax minimization and more concern for income tax minimizations and other valuable planning ideas. Thankfully, there are things that can be done with an estate before and after your loved one passes away that can add value to an estate for them as they age as well as for their heirs.

Tips for Aging Loved Ones

If you are going over your elderly’ loved one’s estate plan, there are some important items that you should review or look out for in their estate. These issues can include: