Articles Posted in Estate Planning

While many members of the Baby Boomer generation view Millennials as self-involved, the Millennial age group has been maturing. Some Millennials are even currently in their early 40’s. This means that many Millennials are reaching a point where they are having to engage in difficult conversations with their parents about estate planning. While many people falsely believe that estate planning is only the process of designating who should receive what assets as well as how debts are settled after a person passes away, estate planning also involves deciding who should make decisions about incapacity as well as other critical end of life issues. To better help you prepare to have a conversation with your parent, this article reviews some critical estate planning discussion tips that you should remember.

# 1 – What Documents You Need to Prepare

Wills are critical for resolving issues with a loved one’s estate after they pass away. There are also other types of critical paperwork that your parents should prepare while they are still alive. These documents include things like health care proxies, living wills, and powers of attorney. Creating these documents is critical, particularly if your loved one has a history of either Alzheimer’s or dementia. You should also know where your parent stores all of this paperwork. You should additionally ask your parent to create a list of passwords for accounts.

Trusts are either irrevocable or revocable. Many people prefer revocable trusts because they want to avoid placing their assets into a trust whose terms they can never change.

Simply put, irrevocable trusts are trusts that cannot be modified or terminated without the permission of the trust’s beneficiary. After passing assets into the trust, a grantor cannot change the terms and removes all rights of ownership to these assets.

Meanwhile, a revocable trust’s terms can be altered or canceled. During the life of the trust, income is distributed to the grantor, and only after the grantor’s death are assets passed on to the beneficiaries. 

Countless families have members who are black sheep. These individuals can end up influencing how the family passes on assets. Regardless of the situation, it is critical to evaluate and reflect on your beneficiary’s situation when it comes to estate planning. As a result, this article reviews some critical issues to consider about estate planning if you have a black sheep in your family.

# 1 – You Need Not Divide Your Assets Equally

Disinheriting a beneficiary is a more routine occurrence than many people think. There are various reasons why you might decide to disinherit a beneficiary that has little to nothing to do with that beneficiary’s lifestyle. Parents might decide to leave more assets to a special ended child. Other times, parents might have helped a house with something while the parent was alive and wants now to make sure that an equal amount of assets are passed to each child. Regardless of your reasons for disinheriting a beneficiary, it is a good idea to explain either in your estate documents in a separate document your intention for unequally dividing  assets.

Unfortunately, there’s no one size fits all estate plan. This couldn’t be truer during a year when a large number of uncertainties exist about the future. The Covid-19 pandemic has changed our lives in countless ways, which includes an increased concern about end of life issues. As a result, as we begin 2021, there are some helpful estate planning strategies that you might consider implementing.

# 1 – Grantor Retained Annuity Trusts

Grantor retained annuity trusts are financial instruments that are used as part of the estate planning process to both reduce taxes on large financial gifts to loved ones. In accordance with these trusts, a person transfers property to an irrevocable trust for a certain time in exchange for annual annuity payments. At the end of the trust term, a beneficiary receives the remaining assets. Because interest rates are currently low, there is an increased likelihood that the amount passing to the beneficiary will surpass the calculated amount of the gifts, which allows assets to pass to family members without being subject to gift taxes.

In accordance with the Tax Cuts and Jobs Act, a person can transfer up to $11,580,000 without facing either estate or gift taxes. This amount, however, will lower at the end of 2026 and revert to $5,000,000. Many people are worried, however, that due to the change in political administrations that this amount will be lowered before then.

Spousal Lifetime Access Trusts are irrevocable trusts established by a donor spouse during his or her lifetime for the benefit of the other spouse. While the donor spouse gives up ownership of the assets, the beneficiary spouse continues to enjoy access to assets placed in the trust. Various issues should be considered if you are interested in creating a spousal lifetime access trust, and this article reviews just a few of these benefits.

# 1 – Asset Protection

People who have an estate with various assets often need to be prepared to contend with sudden changes in both market valuation and tax laws. During the COVID-19 pandemic and an era of both political uncertainty and quickly changing markets, it can be particularly difficult to decide what assets to transfer into a trust. This article reviews some tips and strategies that you can follow to add flexibility to your estate plan so you can make quick decisions to capture the most of estate opportunities in the changing market.

# 1 – Utilize “Intentionally Defective” Irrevocable Grantor Trusts

Intentionally defective grantor trusts are best thought of as grantor trusts with a purposeful flaw that makes sure the trust creator continues to pay income taxes. An intentionally defective grantor trust can be utilized to reduce estate taxes. A grantor creates the trust, transfers investment assets into the trust while retaining the ability to reacquire assets in the trust through the substitution of other equally valuable property, pays gift tax on the transfer, and pays income taxes on any increase in the trust’s value. 

Estate planning does not always appear on people’s things to do. Living through the coronavirus pandemic as well as approaching the second wave of the COVID-19 pandemic, however, should change the urgency with which people approach estate planning. New York currently has the fifth-highest number of COVID-19 cases among the states with more than 650,000 confirmed cases. Inevitably, some families during the pandemic will only discover that they lack sufficient legal documents when a loved one dies. To avoid expensive court cases, remember that estate planning is one of the best ways to prepare for the unexpected. To help you begin considering what legal documents to include in your estate plan, this article reviews some of the most common tools that people utilize.

# 1 – Wills

A last will and testament informs the court of who you would like to receive your assets after you pass away. This document also informs the court who you would like to make responsible for ensuring that your bills are paid and that assets transfer to the correct people. If you do not create a will and have not established other ways for your assets to be handled after your death, your belongings will likely not pass to the desired people. Instead, courts will often intervene and decide about who should receive these assets.

Wills are an excellent fundamental of many estate plans. If you pass away without a will, a New York court will be tasked with making the difficult decision of who should receive your assets as well as who should look after your children. If you’re like one of many adults in New York who has been forced to confront their mortality this year due to the COVID-19 pandemic, you’ve likely considered whether your will is up to date or if you’ve ever written one at all. While all estate planning should begin with a will, however, you should realize that wills are just one small piece of the estate planning puzzle. This article reviews just some of the most critical reasons why your estate plan needs more than a will.

# 1 – Wills Have Limitations Regarding Assets

Wills are estate planning documents that help you determine how matters should be handled when you pass away. You can be as specific as you’d like with wills or keep the terms of these documents open. While wills control the distribution of many assets, certain other assets pass outside the terms of wills including retirement accounts like 401(k) plans and individual retirement accounts. This means that beneficiaries listed on retirement accounts will often receive assets regardless of the terms of a will. Regular bank accounts can also have beneficiaries listed. If a beneficiary is not listed on the terms of retirement accounts, these assets will automatically pass into probate.

It’s not an uncommon story. In their final years or months, a loved one decides to leave a large amount of assets to someone they have just met. Often, these estate plans defy previous orders that would have passed on assets to family members. In these situations, family members and loved ones are often left whether they can pursue an undue influence claim. This article considers the nature of such arguments.

The Legal Basis of Undue Influence Claims

In New York, undue influence describes the influence to destroy the influence of a person engaged in estate planning and substitute another plan in its place. As a result, the estate planner is compelled to decide against their will due to complexities like fear, the need for peace, or an irresistible urge. 

For many people who pass away, their home is their most valuable asset. As a result, several estate planning strategies are utilized to hide such an asset. One of the most common estate planning tools used to transfer assets is a qualified personal residence trust. Such trusts allow the creator to avoid potentially substantial tax complications without facing significant challenges during their lifetime. After the terms of the trust end, the remainder then passes to designate beneficiaries. Because people interested in qualified personal residence trusts often have several questions about this estate planning strategy, this article considers some nuanced questions about how these trusts operate.

What Happens If You Outlive The Terms of the Trust

It’s easy to end up uncomfortable with the possibility that you might still be alive when the terms of the trust end. In such a situation, the remainder beneficiaries will inherit your assets. This might mean that you need to pay the beneficiaries rental to continue residing at your home. Although this might seem like a substantial challenge at first, realize that this type of action often helps to satisfy the estate planning goal of transferring assets on to loved ones.

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