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For many years, life insurance played a critical role in estate planning to either pay off or avoid estate taxes. Due to the raising of exemptions to a sizable degree including both on a federal and New York state level, people now utilize life insurance to achieve various goals. This article reviews some of the ways that you can achieve estate planning goals through the use of life insurance.

Income Taxes

Following the recent passage of the Secure Act, some new techniques have been introduced involving income taxes. The Act requires beneficiaries who inherit IRAs to make withdrawals from these accounts over the following decade. The creation of this 10-year duration lowered what was once expected to be the rest of the withdrawer’s life.

As the covid-19 pandemic continues throughout the country, many experts are gaining a better understanding that the pandemic left on older individuals, who are the demographic hit most devastatingly by Covid-19. New studies have provided some helpful insights. For example, data shows that older individuals residing in their own residences have faced an increased risk of passing away from covid-19, more than was previously understood. While nursing home fatalities received significant attention, a much larger number of adults passed away from covid while living outside of nursing homes.  

This new research tackles some important questions including what conditions place seniors at an elevated risk of passing away due to the coronavirus, the number of older individuals who might have died without the pandemic, and the number of “excess” deaths that are connected to the covid-19 pandemic. It’s already understood that older individuals were disproportionately impacted. New details about the vulnerabilities of the elderly, however, are illuminating while the number of covid cases increases again and unvaccinated people are still at an increased risk of covid-19. 

Details about the Study

A variety of myths linger about estate planning. One of the most enduring of these myths is that estate planning is only for the wealthy. In reality, however, estate plans perform countless functions and all adults need them. Estate planning is not simply something that a person needs when they pass away to manage their property. Estate planning does this important task but also performs other valuable functions like planning for your potential incapacity. As people age, the chances that they will need help from someone else later on in life rise substantially. Furthermore, mishaps and tragic illnesses can also occur despite a person’s age. This article reviews some critical reasons why most people, regardless of age, need some type of estate plan.

Healthcare Decisions

All adults can benefit from creating a healthcare directive that addresses who will make healthcare decisions for the individual if they are incapacitated or otherwise not able to do so. A healthcare directive establishes a person’s choices regarding, and other issues like pain medication, organ donation, and other issues that must be decided if a person is incapacitated and cannot care for himself or herself. The person who is appointed as a healthcare agent will also be tasked with making difficult end-of-life decisions involving cremation and burial.

In May 2021, the Biden Administration announced its “Green Books” which includes a summary of the administration’s tax proposal. Even though this is just a proposal and not actual legislation, it’s critical to understand that the administration is focused on taxing high net worth individuals at a higher rate than the previous administration. 

 
    Most notably, this proposal does not include an increase in the estate tax or federal gift rates. Several other important proposals, however, would greatly alter the fundamental aspects of estate planning strategies by substantially reworking capital gain taxation regulations. It remains uncertain, however, whether the proposals in this “green book” will end up being passed into legislation. The proposed date at which these measures will become effective is January 1, 2022, though. To better prepare you for what lies ahead, this article reviews some important details to understand about the proposed changes.

 
Treat Gifts of Appreciated Property as Realization Events

If you’re planning on making the most of estate planning, you should focus on what your goals are as well as how you can best achieve them. Life insurance plays a critical role in the estate plans of many people. To make the most of life insurance, however, it’s a good idea to first articulate your goals then consider how life insurance could help you achieve these goals. This article can review some of the most helpful ways that you might decide to use life insurance as part of your estate plan. 

 
Replacing Income

 
    Many people obtain life insurance as a way to replace income and make sure that loved ones still have funds as well as the ability to remain at home. If you’re in your peak earning years, which run from 35 to 55, income replacement is particularly critical to consider. While the risk of death might be low for a person at this age, death has the greatest potential to impact the lives of those around you. There will be a substantial amount of your challenges for your loved one to face if something happens to you. 

Whether it’s the internet or on television, estate planning strategies and offers are common to encounter. Whatever strategy you end up selecting, your intentions should be captured in your estate planning documents. It’s also a good idea that no one takes advantage of you and you do everything possible to avoid participating in a fraudulent estate planning scheme. To better prepare you for the various estate planning scams out there, this article reviews just a few of the most common types of estate planning fraud about which you should be aware. 

# 1 – Imposter Scams

The most expensive type of scam, imposter scams, involves fraudulent individuals who pretend to be someone you trust. This individual then tricks you into transferring over assets or personal information. These scammers are known to threaten arrest or adverse legal action if their orders are not followed. If you receive a call from anyone claiming to be part of a government organization, you should promptly dismiss it as a scam and hang up.  These organizations are not known to make threats over the phone. 

Estate planning is a fundamental aspect of any thought-out financial plan, but when it’s your loved ones who need to create a plan, it can be challenging to discuss this issue. One reason it’s difficult to discuss estate planning with a loved one is that this often involves confronting sensitive issues including that not all of us will live forever. While it’s most common for adult children to help elderly parents with estate planning, this is not always the case. In reality, people of any age who care about one another can help each other with estate planning. If you’re debating navigating the estate planning process with a loved one, there are some helpful pieces of advice that you should remember to follow.

Approach Helping Your Loved One in the Right Way

If a loved one refuses to get his or her estate plan in order, one proven strategy that can help is obtaining the assistance of any financial professionals who your loved one trusts. These professionals can often recommend estate planning attorneys who will be a good match for the needs of your loved one. If your loved one does not have this type of estate planning help in place, you should prepare to attend the first meeting with your loved one’s estate planning attorney to make sure that this proceeds as smoothly as possible. Also, while approaching your loved one about estate planning, you should remember that it’s a good idea to force your loved one into making a decision. Instead, it’s best to take a gentle approach that your loved one considers estate planning.

Second marriages can help individuals cope with the pain associated with losing a spouse through death or divorce. If other beneficiaries are involved, you should consider what will happen to your assets after you pass away. You cannot guarantee that everyone in a blended family will be happy with the arrangements associated with your second marriage. Fortunately, however, it’s possible to avoid some mistakes so your family does not lose out on receiving an inheritance. With adequate estate planning, you can also make sure that your former spouse does not receive an inheritance if you do not intend so.  To better prepare your estate if you’re in a second marriage, this article reviews several estate planning tips that you should consider utilizing. 

# 1 – You Don’t Have to Treat All Heirs Equally

Most spouses do not marry while they are in equal financial positions. This is even more true for second marriages. If your new spouse moves into your residence, you might want your children to receive proceeds when your home is sold instead of your new spouse. Remember, in these situations, there is no established order that your assets must pass on equally to your children. There are various reasons why you might decide to treat your children unequally including children with disabilities, children who suffer from gambling conditions, or various other factors. 

Transfer on death accounts pass on assets to an appointed beneficiary when the account holder passes away. When you establish a “transfer on death” account, assets pass directly to beneficiaries at the time of the account owner’s death. While assignments of this kind can help to avoid probate, account titling should be coordinated with the account owner’s death, especially when larger accounts and estates are involved. 

 
    While simply titling an account, “transfer on death”, and adding a beneficiary might seem like a good idea, this is not always the case. Transfer on death accounts can easily be set up on investment accounts. The primary benefit to these accounts is that they can easily be transferred to a beneficiary. Another advantage is that beneficiaries can be revised more easily than amending a trust. It’s important to understand, however, that titling an account “transfer on death” does not resolve all of your estate planning needs. Various mistakes can occur with any type of beneficiary designation. As a result, this article reviews some important details to consider if you plan on using a transfer on death account. 

 
# 1 – Life Changes Must Be Addressed

Understandably, many clients want to appoint children or grandchildren to receive their assets. Appointing a minor beneficiary directly to an account, however, can present its fair share of challenges. Unfortunately, clients often assume that the estate planning process is complete after they sign a will and trust. These individuals often then name the same individual named in their estate planning documents as the direct beneficiaries of their accounts. Remember, if a designated beneficiary is a minor at the time of an account owner’s death, several undesirable results can occur. This article reviews just some of the most important reasons why you should be careful when appointing a minor beneficiary. 

Problems with Naming a Minor

Some substantial reasons exist to dissuade you from naming a minor as the beneficiary of your estate. The most substantial of these problems include the following:

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