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One of the primary purposes of responsible, comprehensive estate planning is to make sure that you are able to distribute as much of your estate as possible to your chosen heirs. After all, you worked hard for a lifetime to build your estate and most people engage in estate planning to make sure as much of their estate survives as possible. A recent article from The Motley Fool reminds us of the role Roth IRAs can play in making sure that the inheritances you leave to your heirs do not fall victim to unexpected taxes. This is especially true in today’s world where there is a great deal of uncertainty as to the direction of our nation’s tax system.

Roth IRA Basics

A Roth IRA is an individual retirement plan that allows you to put a certain amount of money into it each year. The money you contribute to a Roth IRA will already be taxed. That means that qualified withdrawals from the Roth IRA will be tax free when you start to take them. Roth IRAs might even provide a tax credit for some of your contributions depending on a number of factors regarding your individual circumstances and financial situation. The earlier you make the choice to start a Roth IRA, the better as a Roth IRA must be active for at least five years prior to your death in order to escape federal income taxes.

When the United States Supreme Court legalized same-sex marriage, it opened up a lot of doors that had been closed to many people in society. However, it also created a significant amount of new legal concerns for same-sex couples. With marriage, a host of new questions and responsibilities have arisen. Not the least of those concerns is responsible, comprehensive estate planning. While comprehensive estate planning is crucial for all individuals regardless of their marital status or sexual orientation, it is an extremely important consideration for same-sex couples that may not have had an estate plan in place.

Potential Issues

An article from the Cleveland Jewish News points out that same-sex couples – especially unmarried same-sex couples – could still face a host of legal hurdles when it comes to the death of one person in the relationship. These concerns could include issues involving health care and power of attorney, which make it extremely important for unmarried couples to make sure documents addressing these concerns are in place should they be needed. Without these documents, there may be laws in place prohibiting an unmarried same-sex partner from making important financial and health-related decisions if an individual becomes incapacitated or otherwise unable to make such decisions on their own.

Once a tool for wealthy families to protect their assets when heirs got married, prenuptial agreements are now much more common in our society. Typically, such agreements cover property rights and other aspects of asset retention – but they can also set forth provisions for how each spouse will handle drafting their respective Wills. Since prenuptial agreements are increasingly more common today, it is important to understand how they could affect your estate plan. The following information can provide some insight into how prenuptial agreements might impact your estate planning goals.

Prenuptial Agreements and Priority

While you may think that your Last Will and Testament will take priority over other documents as long as it is executed in accordance with the law, that is not necessarily true. In fact, a prenuptial agreement is likely to take priority over your Will depending on the circumstances within the agreement and how it was drafted. Typically, the only way to avoid this would be for an individual to prove that a prenuptial agreement was signed under duress or that the agreement itself was designed in a way that encouraged divorce and exclusion from assets.

There are a number of reasons that people create joint bank accounts. Perhaps you and your spouse want to share a bank account to help simplify your marital finances. You may use joint bank accounts to help teach your children the importance of budgeting and financial planning. You may even need to have access to someone else’s bank account if they are incapacitated or cannot make purchases on their own. Whatever the reason for having a joint bank account, they are not without potential issues when it comes to your estate plan.

Vulnerability

Adding a person as an owner of a bank account inherently makes the account itself more vulnerable. In addition to the potential issues raised below, the more people you add as owners of a joint account the more likely you are to fall victim to theft – including identity theft. By adding individuals to the account, you will increase the risk of lost or stolen cards and/or checkbooks. Additionally, if the person you add to the account is not financially responsible, you risk losing the assets in that account because of poor financial planning.

In today’s day and age, identity theft is all too common a problem. In fact, the news is often filled with horror stories related to identity theft. Identity theft is a serious problem that can wreak havoc on your life, and it can also have a significant impact on your estate plan. The following information can help you start to understand the potential effects of identity theft on your estate plan.

Access to Private Information

Wills, powers of attorney, healthcare proxies, and other estate planning documents contain very personal information. Not only do some documents have your social security number, but they could also contain other sensitive financial information, too. It is extremely important to safeguard these documents to prevent such information from slipping into the wrong hands. For instance, if someone were to gain access to this type of personal information they could potentially open up credit cards in the name of the deceased individual or even file a final tax return in their name before heirs have a chance to do so.

There are two main types of trusts: revocable and irrevocable. Basically, each trust is self-explanatory on the surface. For the most part, you have unfettered ability to revoke or amend a revocable trust. In contrast, it is extremely difficult and sometimes impossible to revoke or even amend an irrevocable trust. On the surface, it appears – and is true – that a revocable trust provides the creator of such trust with greater flexibility in modifying that trust to meet their comprehensive estate planning goals. However, irrevocable trusts still play an important role in estate planning and it is important to understand their benefits to make an informed choice about the type of trust that might be right for you.

Avoiding Probate

While most trusts will avoid probate, irrevocable trusts established during your lifetime will definitely be able to avoid probate. This will ultimately save you and your loved ones time and money by allowing a trust to take effect immediately as it has been designed to do. Your loved ones will be able to access an irrevocable trust according to its structure without having to wait for the courts to approve a Will or other documents related to probate of the deceased person’s estate.

In the second part of our two-part series on recognizing fraudulent Wills, we will continue to explore various characteristics of a Last Will and Testament that might indicate it is fraudulent. While some of the factors in the first part of this series might be a little more obvious, the information below may help you understand some less common but still observable aspects of a Will that could indicate it has been tampered with.

Wills Disproportionately Benefitting Religious Organizations or Charities

Especially in cases where a deceased person was not active in a religious organization or was only minimally active, this type of provision in a Will could indicate that something is amiss. Sadly, many elderly people can be easily influenced by unscrupulous individuals that want to use assets for their own benefit or to benefit something they find to be particularly important. Sometimes this comes at the hand of the religious organization itself, and sometimes it comes as a result of the influence of an individual with close ties to the religious organization in question. This is also true for large distributions to charities a deceased person would not normally have given money to or did not have a record of supporting during his or her lifetime.

Unfortunately, there are many unscrupulous people in the world that will go to great lengths to take advantage of certain situations. This is true when it comes to a person’s Last Will and Testament. While you might never contemplate changing a person’s Will to suit your needs, that does not mean other individuals will not try. Unfortunately, this can sometimes include members of your own family. While there are a variety of steps an individual can take to cover their tracks if they have interfered in the Will of a deceased person, there are some common warning signs that might help you detect if a Will has been forged or not. The following information may provide you with some insight in what to look for.

Wills Not Signed in Presence of a Lawyer

If a Will was not signed in the presence of an experienced estate planning attorney, there is a good chance the Will could be fake. In fact, if the Will was not signed in the presence of the deceased person’s estate planning or family attorney but was signed in front of a different attorney with little or no relationship to the deceased, there could be foul play involved. Estate planning is often an intimate, complicated process. It is important for individuals to be comfortable with their estate planning attorney, and utilizing outside legal services – especially legal services that have a relationship with potential beneficiaries – could mean a Will is not proper.

Once a tool for extremely wealthy individuals, trusts have gained in popularity over recent decades. Changes in laws governing trusts and the development of new approaches to estate planning have made trusts an invaluable tool for many working class families to ensure they are able to provide financial security to their loved ones. A trust can help make sure that your assets are distributed according to your wishes in a variety of different ways, some of which are discussed below. An experienced estate planning attorney can review the various types of trusts that you may be eligible for and can help you determine the right type and structure to achieve your estate planning goals.

Trusts Can Avoid Probate

The majority of trusts are established during a person’s lifetime, and these trusts will be eligible to avoid the probate process. While the New York probate process is less difficult than the probate process in other states, it can still be time-consuming and costly. Trusts are an effective way to allow loved ones to access the assets you wish to distribute to them without waiting for the probate process to be complete. Ultimately, this saves you time and money in addition to keeping assets within the trust out of the public record associated with the probate process.

In the second part of our series on the topic of things you need to do when a loved one dies, we will explore some of the things that should be addressed within roughly six months of the death of a loved one. Again, these lists are not exhaustive. However, they can help you start to think about the various issues that need to be addressed.

Notify Social Security

Within one month after the death of a loved one, the United States Social Security Administration needs to be informed of their death. They will have to put various processes in motion that stop social security and other benefit payments from continuing. Failure to do so could result in identity theft, or even if liability for repayment of such benefits. Depending on your relationship with the deceased and their benefits, you could also be eligible for survivor benefits that can have a significant positive impact on your everyday life.

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