Articles Posted in Estate Planning

While Americans have definitely paid more attention to estate planning in the last several years, not enough are yet taking estate planning as seriously as they should. According to WealthManagement.com citing a survey from Caring.com, only slightly over 40 percent of Americans have estate planning documents in place. The number of those individuals that have a healthcare power of attorney document in place is even lower. It is critical for all Americans to consider comprehensive estate planning as an important part of aging and responsible financial planning. It’s also important to remember that effective estate planning doesn’t end at the creation of an estate plan, but also includes modifying that plan as your individual circumstances may dictate.

Planning in Politically Volatile Times

The last year has seen a great deal of political turmoil both here in the United States and in countries around the world. Regardless of how you may feel about these events, they may have a serious impact on your estate planning. One such event is the United Kingdom’s successful referendum to leave the European Union. Many retirement investment accounts were affected or even frozen because of the decision to leave the European Union, and many investors are still trying to figure out how to cope with these changes. If you have assets that could be affected by these types of political changes, it is important to work with a financial planner as well as an estate planning attorney to make sure that your estate plan accounts for these changes.

Unfortunately, traditional social security often doesn’t provide the means for seniors to live comfortably after they retire. The cost of living often rises quicker than adjustments can be made to social security allowances. There are many different types of retirement savings strategies to help supplement your retirement income so that you do not have to rely solely on social security. One such strategy is an Individual Retirement Account, or IRA, which is a type of retirement savings account where you can contribute funds for your own retirement. The two main types, traditional IRAs and Roth IRAs, differ in how they are taxed but offer the same basic benefit: supplemental retirement income. However, it is important to be aware of what happens to an IRA when the person who owns it passes away.

When the IRA Has a Valid Beneficiary

Typically, an IRA is a non-probate asset. That means that all you usually need to distribute an IRA upon death is a valid beneficiary form. In cases where a valid beneficiary form has been filed with the administrator of your IRA, then there is usually little issue ensuring that the IRA transfers to that beneficiary. In these cases, a beneficiary to an IRA that has not yet reached 70 ½ years of age can choose to withdraw the entire amount of the IRA within five years of the owner’s death. After a certain age, a beneficiary may have to make periodic withdrawals as the owner would have had to do, or they may choose to do this to stretch the funds within the IRA over a longer period. With a traditional IRA, the beneficiary withdrawing it will need to pay taxes on the amount of the IRA. Tax consequences of a Roth IRA can be different, and you should consult with an investment planner or estate planning attorney to find out more about rules governing their distribution.

Estate planning is not something that should be taken lightly, and understanding the gravity that comes with your estate planning decisions is an important part of creating a comprehensive estate plan. However, one of the most common problems with estate plans is that while they may accurately reflect your wishes, they don’t always reflect what your family thinks those wishes should be. That can leave them vulnerable to attack in court, which can cause unintended consequences for your assets. Aside from utilizing the services of an experienced estate planning attorney, there are some ways to avoid common issues that can give rise to litigation of an estate plan.

Pay Attention to Laws of Intestate Succession

Intestate succession laws help determine how a person’s assets are to be divided when they die if that person has no Will or their Will is found to be invalid. While you are certainly free to distribute your estate as you see fit, understanding the laws of intestate succession can help you distribute your estate in a way that will discourage Will contests because beneficiaries that stand to benefit little from having a Will invalidated will often think twice about doing so.

Almost every facet of today’s world seems to be based on technology in one way or another. From the phones we use to the cars we drive, technology is everywhere and new technology is emerging each day. We use technology to manage many of our assets as well as to store personal mementos and other important items. You may also have important information about insurance and retirement accounts stored online that isn’t necessarily readily accessible to your heirs. Unfortunately, traditional estate planning practices don’t always protect your digital property. The Legal Intelligencer recently reported on the importance of protecting your personal digital property with proper estate plan provisions.

Types of Personal Digital Property

Protecting your digital property begins with understanding exactly what is included, which can be more than you might think. The article breaks down personal digital property into three categories, which include:

With a new year comes many new changes. Now that we are already almost a quarter of the way into 2017, it’s important to look at the many options you have in the coming year to create a more comprehensive and up-to-date estate plan. Recently, we have written about ways to take care of your estate plan and important factors to keep in mind when making estate planning decisions. Below are some specific areas that you may want to consider regarding estate planning throughout the year.

  1. Review Documentation

Are all your documents complete? Are they signed where they need to be signed and placed in a secure location? An experienced estate planning attorney will review your estate planning documents for accuracy and to ensure they comply with the law, but you should be sure any additional documents – like insurance forms and beneficiary designations – are complete.

While serious illness and death are certainly difficult topics of conversation, they are nevertheless extremely important. If you do not express your wishes regarding healthcare in situations where you cannot make such decisions yourself, choices about your care will often be left to family members. When a loved one becomes too ill to make decisions about their care, there are many questions that arise about medications, procedures, and other treatment options. That’s why it is extremely important for you to communicate your wishes to those close to you.

Not only does doing so help to ensure that your specific wishes for your healthcare are carried out, but it can also provide a great deal of relief for family members that may have otherwise had to make such decisions on their own. However, while talking about such things is important, you may also want to include options like a living will and healthcare proxy as part of a comprehensive estate plan to legally memorialize your wishes. The following information may help you decide if one or both options is right for you.

What is a living will?

The estate planning process is individual and unique to each person that goes through it. There is no one-size-fits-all template that will work for everyone. There are various tax concerns to think about, familial relationships, and many other factors that influence how we decide to distribute our assets after we die. The process can be confusing, but an experienced New York estate planning attorney can help simplify it for you. However, assets transfer in four ways common for almost everyone.

Transfer Via Last Will and Testament

Most people are familiar with the concept of a Will. A Last Will and Testament is a written document that expresses your wishes as to how your assets should be distributed upon your death. While many assets simply require nominating a beneficiary, which is discussed below, other assets require you to specify how you wish your assets to be distributed upon your death. A Last Will and Testament generally only includes property that is individually owned and is subject to validation by New York’s Surrogate Court.

We recently posted about situations that may make it important to revise your estate plan, and about how reviewing your estate plan is an important part of ensuring it is accurate and secure. One component of an estate plan that continues to grow in popularity and functionality is a trust. However, what happens when a trust no longer serves the purpose for which it was established? Life events and other factors can significantly impact how effective your trust will be, and it is important to monitor your trust on a regular basis to ensure it still meets your needs – and to take steps to fix it if it doesn’t.

When might a trust break?

The law is always changing. Estate planning law is no exception. Some changes in laws that affect estate planning decisions can cause a trust to break. For instance, if a trust was created many years ago when the gift tax, estate tax, and generation-skipping transfer taxes had lower exemption values. Consequently, such trust may no longer be necessary to help you avoid certain tax burdens that they were designed to avoid. The changing exemptions and other factors surrounding these taxes can also make the prospect of paying taxes associated with the trust less appealing than taxes that would be due without the trust.

Comprehensive estate plans often include precautionary measures that ensure your assets are protected and distributed according to your wishes. Many times, many of your assets will be distributed to your spouse. However, it is important to think ahead for every possible scenario when engaging in comprehensive estate planning to prevent any unnecessary interruptions in the distribution of your assets once you have passed on. Some or all of the provisions discussed below could be a good fit for your estate plan and protecting your assets.

Simultaneous-Death Clauses

One scenario you may need to consider when engaging in responsible, comprehensive estate planning is one in which you and your primary beneficiary die at the same time or in a manner where it isn’t possible to determine who died first. Popular among married couples that often plan to leave a large part or all of their estate to their spouse, this type of clause allows you to appoint an individual who will be named as the first to die in situations where authorities are unable to determine who died first.

There can be a lot of confusing terms involved in comprehensive estate planning. Estate plans are meant to be individual and flexible, and a New York estate planning attorney can provide you with a variety of options that help you create a plan that works for you and your wishes. One option that an estate planning attorney might present is a revocable trust, sometimes referred to as a living trust or a revocable living trust. The following provides some basic information about what these trusts are and how they operate.

What is a revocable trust?

Trusts are agreements between you and a third party in which you allow the third party, often referred to as a trustee, to hold assets for your beneficiaries. There are a variety of different kinds of trusts that each have different nuances that may work best for you. However, revocable trusts are often used in estate planning. A revocable trust is a trust you can create during your lifetime that may help you manage and protect your assets if you become ill or incapacitated. The American Bar Association notes that you may name yourself as trustee while also selecting a co-trustee, should you choose to do so. As the name states, revocable trusts can usually be created to be revoked or changed as you see fit. Revocable trusts should not be confused with irrevocable trusts which have distinct characteristics, especially related to taxes.

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