Estate Planning

Taking Advantage of the Estate Tax Portability Provision

Published on: July 5, 2022 | by Ettinger Law Firm

The estate tax exemption is slated to return to $5 million in 2026. For married individuals, the exemption is considered portable”, which means that the estate of the second spouse to pass away can benefit from the unused amount of the exemption that was available to the first spouse who passed away.

This change in tax law means that wealthy individuals’ estates can be protected from the claw of federal law through a $10 estate tax exemption. The indexed amount is $12.06 million for people who pass away in 2022. Meanwhile, transfers among spouses remain exempt from taxation due to the unlimited marital deduction. Consequently, many people do not need to be concerned about the federal estate tax.

The portability election, which has been titled by legislatures the “deceased spouse unused exemption” (DSUE) is an election utilized by an estate’s executor.

What You Should Know About Creating a Special Trust for Your Elderly Loved One

Published on: July 5, 2022 | by Ettinger Law Firm

Many adults with special needs children routinely worry about how the child will survive when the parent can no longer support them. Often, leaving money directly to a special needs child can end up jeopardizing that child’s ability to receive any support from government-funded programs including Medicaid and Supplemental Social Security Income. To receive funds from these programs, beneficiaries often must have below a few thousand dollars in assets.

In these situations, special needs trusts can help to provide for the beneficiary once the parent or loved one is no longer around. Because the special needs trusts are viewed as owning assets, they are exempt from asset limit tests associated with government programs. Special needs trusts can meanwhile help to support quality-of-life improvements for a beneficiary. Special needs trusts also help to avoid situations where a family member receives funds and the other relatives are left to face the burden of this responsibility as well as the cost of care.

Due to the interest in special needs trusts, the number of these trusts has been growing substantially. Despite these benefits, special needs trusts come with certain regulations regarding who can qualify to use them as well as how earnings are taxed, which can end up influencing situations that warrant using these trusts.

Estate Planning Alternatives to Quiet Trusts

Published on: June 22, 2022 | by Ettinger Law Firm

Many people want to avoid involving children in conversations about trusts. This article reviews some ideas that are helpful to consider when people decide whether to establish a quiet (or “silent”) trust or a trust that allows keeping the trust’s existence or details about the trust from beneficiaries as well as for the extent of time that the trust will remain quiet.

Research reveals that approximately 70% of wealth transfers do not operate properly by the third generation. Not operating properly in this context involves the receiving generation losing control of assets in the trust. Routinely, this is not due to inadequate wealth planning or unwise investing, but instead to an absence of trust, transparency, and lack of planning. Before considering quiet trusts, it’s a good idea to consider the wider picture of family governance as well as preparing children for the assets that they will one day receive. Instead of considering quiet trusts as an alternative to wills, you should also consider involving your beneficiaries directly in discussions about the trust once they reach the appropriate age. What constitutes an appropriate age is influenced by the structure of a family, but in many cases is earlier than a person thinks.

How Wealth Is Transferred

Virginia Holds Arbitration Statements in Trusts Cannot Be Enforced Against Beneficiaries

Published on: June 22, 2022 | by Ettinger Law Firm

In the recent case of Boyle v. Anderson, the Virginia Supreme Court issued what has the potential to be an influential decision about arbitration statements found in trusts.

The Story Behind the Case

Before his death, a man established an inter Vivos irrevocable trust that he intended to be divided into three portions. One third was to be given to the man’s daughter, one to his son, and one to the children of the third child. After the man’s death, his daughter became both the trust’s beneficiary and trustee. The trust included an unambiguous arbitration clause that stated any dispute that is not amicably resolved through mediation or any other method should be resolved through arbitration.

Raising Issues of Incapacity or Undue Influence to Challenge Estate Plans

Published on: June 22, 2022 | by Ettinger Law Firm

After a loved one passes away and you learn about that person’s estate plan for the first time, it’s common to encounter various emotions as you respond to the terms of the plan including shock, sadness, or even anger. Based on the estate plan’s appointments, beneficiaries, or other times, you might be left wondering if you will be able to raise any type of claim to challenge the terms of the estate plan. This article reviews some of the basics that you will need to follow if you plan on raising a strategy based on either undue influence or incapacity.

# 1 – Not Everyone Can Challenge a Will

Beneficiaries do not acquire protected interests in a person’s property until after that person passes away. Often, a person cannot attack a will until after that person’s death. This is because the person who creates the estate plan can theoretically alter the terms of an estate plan any time before the creator passes away. If a person is interested in challenging a Durable Power of Attorney or Health Care Proxy, however, a person can challenge these documents during a person’s lifetime. No restriction exists regarding who can challenge a person’s will. Often, one or more family members of the person who created the estate plan can challenge the document’s terms.

Utilizing Trusts to Reduce Taxes Faced by Your Legacy

Published on: June 16, 2022 | by Ettinger Law Firm

Many people are curious about what happens after they are no longer able to manage their assets. Many chances are created when it comes to estate planning arrangements and trusts play a large role in estate planning. If you choose wisely, trusts fortunately can prove to be an excellent way to reduce the taxes ultimately placed on your estate.

Establishing a Trust

Trusts are a type of arrangement used to the advantage of entities or people that the trust creator selects. Trusts vary greatly in activation as well as how they are accessed. Trusts tend to break down into the following kinds:

Bear Markets and Estate Planning

Published on: June 16, 2022 | by Ettinger Law Firm

Earlier in 2022, the stock market entered what is referred to as a bear market, which happens when the market drops more than 20% lower than a recent high. Financial experts have cited various reasons why the market has declined including, but not limited to, the war between Russia and Ukraine, energy shortages, and inflation. Each of these elements has encouraged investors to avoid losses. The market’s volatility will unfortunately remain for some time, which might make you wonder how this type of market could impact our estate planning.

Bear and Bull Markets

Bear markets are often followed by bull markets, in which losses are recovered. The most substantial growth in the stock market often occurs in what follows a bear market. As a result, people who want to make the most of estate planning should realize that bear markets are an ideal time to make the most of the decline in investment values to make the most of gifts that will be appreciated in the future and to take advantage of existing income tax benefits.

Utilizing Estate Planning for the Digital Future

Published on: June 16, 2022 | by Ettinger Law Firm

People interested in estate planning are increasingly placing digital asset clauses in their estate planning documents. This unfortunately adds another layer of complexity to estate planning.

As focus in digital assets becomes more popular, the need for adequate estate planning also increases. People want to make sure that their financial planning prospers besides that person’s daily use of digital technology.

A large number of people interested in estate planning have even placed clauses addressing bitcoin as well as other cryptocurrencies into the estate plans of clients. Digital wallets go in combination with digital assets because passwords play a critical role in making sure that your loved ones are able to access your assets after you pass away or become incapacitated. Digital assets including social media, blogs, and email accounts are also playing an increasingly more prevalent role in estate plans.

Estate Planning Issues to Consider Before Getting Married

Published on: June 12, 2022 | by Ettinger Law Firm

In contrast to what many people think, the best estate planning considers all

aspects of your life instead of only the end. The estate planning process requires thinking about what is important to you as well as your expectations for loved ones.

Prenuptial agreements, which a person enters into before marriage, guard those you love as well as create a groundwork for transparency and trust. While some people think prenuptial agreements “kill” the romance in a relationship, these agreements often actually act to strengthen. This article reviews some of the most common advantages for estates that people realize by creating prenuptial agreements.

Understanding the Reality of Revocable Trusts

Published on: June 12, 2022 | by Ettinger Law Firm

Imagine you’ve finally met with your attorney to establish an estate plan and are now considering whether to establish a trust. Or a situation where you already have an estate plan that includes a revocable trust. In today’s world of estate planning, revocable trusts have proven to be a common but effective tool for achieving a person’s estate planning goals. This article reviews some of the important details that you should consider about the reality of revocable trusts.

# 1 – Revocable Trusts Are the Same as Revocable Living Trusts

A person can create a revocable trust during their life and maintain the power to revise the trust at any time. Revocable trusts are referred to by various names including a living trust, a revocable living trust, and an inter vivos trust. The terms of a trust are substantially more important than what a trust is called. The critical aspect that distinguishes revocable trusts from other kinds of trusts is the authority to either amend or revoke the terms of the trust.