Articles Posted in Estate Planning

It is risky to leave your estate and financial affairs unattended or secret from the rest of your family. According to research released this year, over 64% of all Americans do not have a will, and half of the people included in that statistic have children. When you do not have a will or keep your estate planning matters secret, it has the potential to cause discord in the family or cause the assets in the estate to be improperly handled. However, with the holiday season upon us, now can be a great time to discuss your estate plans with family members and avoid any potential problems in the future.

Choose the Right People for the Right Roles

One common error in the estate planning process is giving roles to members of the family according to what the testator thinks that they would want, rather than assigning tasks according to who would be best suited for the role. Acting as a fiduciary, trustee, or executor to an estate is a job, and you need to pick the right candidate. This means considering who would be truly best suited to handle tough responsibilities like medical, financial, and legal decisions.

Balancing the relationship between a trustee and beneficiary can be delicate, and if it is not handled properly the results can be costly problems and years of frustration. The beneficiaries are set to inherit valuables, homes, stock, and other assets. Yet it is the very nature of those assets that can cause tension with a trustee who controls the purse strings. However, there are some tips that can help ease the tension and create a good relationship between the person in charge of managing a trust and those set to inherit it.

Address Sources of Tension

The entire purpose of a trustee is to be a barrier between an heir and the money, so there are natural sources of tension between a trustee and a beneficiary. Most often, an heir wants access to their inheritance faster, and the trustee is hesitant out of fear that the money will be spent unwisely.

Each decade of life ushers in a new set of challenges and issues for financial and estate planning. In your 20s, you are trying to establish yourself as independently financial and pay off your student loans. In your 30s, the estate and financial focus typically turns to planning for a family.

There can be more complications in your 40s, where you must balance supporting your children in addition to yourself and possible your parents. This decade is also crucial because there is still enough time before retirement to significantly affect your future. Here are some financial and estate planning moves to make before you turn fifty that can keep your retirement plan on track.

Increase Retirement Plan Contributions

Couples without children have two main tasks when it comes to estate planning: the first is determining how to distribute the assets in the estate. The second, and arguably trickier task, is to assign a person or people who will handle your medical and financial affairs in the unfortunate event that you become incapacitated.

Durable Power of Attorney and Healthcare Proxy

A durable power of attorney form names a person to handle all of your financial matters if you become incapacitated or otherwise unable to take care of your own finances. This includes some legal matters, as well. A healthcare proxy is similar to a durable power of attorney, but this person is responsible for all medical decisions if you are incapable of making those decisions for yourself.

Many parents with adult children find the idea of discussing their estate plans uncomfortable, embarrassing, or unnecessary. Few parents want to think about their mortality or bring up the subject with their kids. Concerns about family fights over parts of the estate, which child is getting what, or reliance on a future inheritance also put parents off from discussing their plans with their children; however, there are some great benefits both emotionally and financially that can come with sharing your plans with your children.

Telling your children ahead of time about your estate plans allows you as parents to explain your decisions and lets the children plan their lives accordingly. Feedback from the children can also have an effect on your estate plans that you can implement before it is too late. In some cases, there can even be tax benefits involved. Full disclosure of estate plans may not be right for every family, but here are five reasons why it might be worthwhile to share your estate planning with your children.

You Can Settle Any Issues

For wealthy donors who wish to put their name on a building, beware. There can be a lot of disappointment for donors who give away large sums of money, thinking that they would get to see their name on a building or institution like a university, science lab, or cultural center but end up in a legal battle instead.

Naming Rights and More

The best way to ensure that this type of drama is avoided is for donors to clearly state their wishes in a detailed, legally binding document. Donors need to make sure that all payment terms, signage, publicity, and deadlines for work to be done are also set within the contract. Each party should know exactly what they are agreeing to.

One estate planning scam is growing in popularity for people who are looking to begin crafting their estate plan and have amassed wealth or business over their lifetimes. The estate planning aggregator claims to do comprehensive planning for people who have concerns about taxes on their wealth or business issues in their estate.

Estate Planning Aggregator

An aggregator is a person who claims to do comprehensive estate planning for individuals with complex estates. Typically, they recommend that you purchase a “wealth blueprint” or something similarly named for tens of thousands of dollars that will detail how exactly your estate will be taken care of.

One New York resident, now 65 years old and in retirement, has amassed a Las Vegas chip collection worth an estimated $500,000 over the course of two decades. However, he is childless, and no one in his extended family has expressed an interest in keeping the collection. He is also concerned that they will sell the collection for far less than its actual worth. Collectors can spend a lifetime accumulating things like baseball cards, comic books, casino chips, and art. However, too often these collectors do not think about what to do with these collections once they pass away.

The Need for Proper Planning

Many collectors hope that someone in their family or group of friends will enjoy their collection enough to keep it and maintain what they have done. Others think that another collector will pay a lot of money to their heirs for what they have amassed and assume that the heirs know what it is worth. Some hope that their collections will be donated to a museum in order to be displayed for posterity. However, none of these plans can be known for certain without proper estate planning.

If you want to lower your overall taxes for this year, now is the time to act. The opportunities to cut taxes on your overall bill are reduced dramatically after December 31. Many taxpayers forget about these opportunities or act too late to take advantage. In addition, Congress has yet to enact any intense tax changes this year, unlike the changes made in 2013. In fact, legislators have not moved on dozens of taxpayer friendly provisions that expire January 1.

Provisions that are Ending

One of the most popular provisions on the chopping block is a law that allows owners of individual retirement accounts who are 70½ and older to give up to $100,000 of their IRA assets directly to charity each year. In addition, a federal write-off for state sales taxes instead of state income taxes and a deduction of up to $4,000 a year for qualified expenses for college or other post-high school education may also end this year.

Part of proper estate planning means safeguarding not only your physical, tangible assets but your digital assets, as well. Many people do not protect these assets for a variety of reasons: a few do not think that it is important, some do not know how, and others simply do not want to think of the prospect of estate planning. However, protecting your digital assets can be easy and doing so will not only give you some peace of mind but will do so for your loved ones, too.

Why You Should Protect Digital Assets

You can do and buy just about anything online nowadays, and most of it you can accomplish with the phone in your pocket. Digital assets are more plentiful than ever, and you might not be aware of how much you have actually amassed in this form. One study by McAfee, a computer protection company, found that the average person has over $35,000 worth of digital assets on various devices that they own.