Articles Posted in Wills

Comprehensive estate planning can be an extremely complicated process for an individual. This is even more true when the individual owns a business. The owners of closely held businesses own businesses with a limited number of shareholders and the stock in such businesses is not regularly traded publicly. While this type of business can provide many benefits for business owners, it can also create issues when one of the business owner dies. However, structuring a buy-sell agreement for a closely held business can help make estate planning easier when it comes to your interest in such a business.

Redemption Agreements

With a redemption agreement, the company itself purchases a life insurance policy on the various owners of the company. When one of those owners die, the sole owner of the life insurance policy – in this case, the company – will receive the benefits of the life insurance policy and can buy back the deceased shareholder’s shares. There are some potentially negative tax consequences for this type of arrangement, including the possibility of the business to be subject to the current corporate alternative minimum tax on the proceeds from the life insurance policy.

If you have assets that will likely appreciate in value, including property that provides income or stocks that demonstrate growth potential, there are ways you can plan accordingly to help you avoid severe tax consequences that might otherwise be related to retaining these assets or allowing them to become part of your general estate.

Two potential vehicles for you to explore are grantor retained annuity trusts (GRATs) and grantor retained unitrusts (GRUTs). With both of these options, you retain an interest in the income from assets placed in the trust. While there are taxes associated with each of these, they may be less costly than other options depending on your individual circumstances.

The Basics

A growing family often includes children. Sometimes, children come with special needs that need to be attended to throughout their lives. These special needs can include physical, mental, emotional, and/or developmental disabilities. When such needs arise, they can cost a great deal of money on a regular basis. A common concern parents or family members of individuals with special needs often have is how those individuals with special needs will be taken care of later in lifer when parents or family members have passed on. For these families, a special needs trust might be the answer.

An Introduction to Special Needs Trusts

A special needs trust is a trust established to address the long term needs of an individual with a disability that may require lifelong care. Many individuals with disabilities may qualify for state benefits and assistance to help offset the cost of long-term medical care and other costs that may arise. If the parents or family members of a person with special needs were to leave assets to the person with special needs, the inheritance may cause the individual to lose benefits provided by the state because the inheritance could cause their income to surpass the level under which a person is eligible for state benefits.

Sometimes after setting up a trust, circumstances occur that change our goals for that trust. Recently, we wrote about how to fix a broken trust which occurs when a trust no longer serves the purpose for which it was established. However, a broken trust is not always the only reason a trust might need to be modified. Depending on the circumstances surrounding your trust, there are several factors to consider when deciding whether or not to move a trust.

Common Reasons to Move a Trust

One of the most common reasons for creating a trust is to take advantage of more favorable tax consequences related to trusts. As such, one of the most common reasons to want to move a trust is to take advantage of more favorable tax-related trust laws in another state. Some other reasons for moving a trust might 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?

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.

When you make the decision to see an experienced estate planning attorney to make a comprehensive estate plan to safeguard your assets and provide for your heirs, it can be a confusing process filled with a lot of legal terminology that might be new for most people. One of the biggest considerations in estate planning, and often one of the most confusing parts of it, is the effect taxes will have on an estate. To help you make the most informed decisions about what route you choose in planning your estate, it is important to have a full understanding of the different types of taxes that may come into play. One of those is known as the generation-skipping transfer tax, and the following information may be helpful in understanding it.

Life Estates

To fully understand the generation-skipping transfer tax, you first need to understand what a life estate is. A life estate is a type of estate in which ownership of real property – basically, a home and the land which accompanies it – is passed to another person and ends upon that person’s death. At that time, it may revert back to the original owner or it could pass along to someone else depending on the conditions you choose to set. In New York, life estates can be an easy way to ensure real property passes smoothly upon death without the need for probate. Life estates are also exempt from the federal estate tax. Usually, creating a life estate is a simple process, as is the transfer of property upon an owner’s death.

With every new change in presidential administration, there are certain to be ripple effects in national programs that reflect the new direction those programs are being geared toward. Often, there is a period of uncertainty connected to funding for many public programs, especially in times of financial crisis. One such important program that millions of Americans depend upon is social security. In today’s day and age, it is difficult for retirees to exist solely on social security, which is one of the reasons responsible estate planning at an early age can help you navigate your retirement years successfully. With potential changes to the way social security updates beneficiaries on their benefits, it may be even more important to consider a comprehensive investment strategy as part of your estate planning.

Fewer Social Security Mailings

According to Laurence J. Kotlikoff, featured expert on NextAvenue.org, the United States Social Security Administration has recently announced that it will be providing fewer earnings and estimated benefits statements to beneficiaries as it moves forward. The agency quietly announced this change as a way to save it more money, stating Congress had cut its budget by 10 percent in the last seven years even though there has been a 13 percent increase in beneficiaries. According to the article, the agency has typically mailed such statements approximately every five years to people not receiving benefits between the ages of 25 and 60, and annually every year after 60. The agency estimates reducing the frequency of such mailings will save it more than $11 million in 2017.

All too often, unscrupulous people attempt to take advantage of others. This is especially common with elderly individuals. When this happens, it is known as elder financial abuse, and it can have a significant negative effect on your estate. Recently, USA Today reported on this growing problem by discussing testimony from a hearing before the U.S. Senate Committee on Aging. Below are important steps that you can take to protect yourself and your assets.

  1. Understand Risk Factors

When elderly people face cognitive impairment, this increases the risk that they will be taken advantage of. Additional risk factors include individuals that attempt to isolate an elderly person from their family, friends, or community. Doing so can put an elderly person at increased risk for elder financial abuse.

Contact Information