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There are several reasons why people hesitate to or refuse to plan for death or incapacity. Failure to create an estate plan, however, can result in a person facing several complications which includes increased fines and placing additional stress on your loved one.
As a result, this article reviews some of the important pieces of estate planning errors you should make sure to avoid.
# 1 – Failure to Create an Estate Plan
The federal estate tax exclusion was recently raised to $11.4, but there are cases where large estates or businesses are transferred to beneficiaries and the recipients are subject to estate taxes. In some situations, the only way for your loved ones to pay for the taxes that accompany these assets is to sell the very assets that you hoped to pass on.
Several estate planning strategies that can be utilized to avoid the risk that your loved ones will end up paying estate taxes. One of the best methods to avoid these estate taxes is to use an irrevocable life insurance trust.
How Life Insurance Trusts Work
Very few people look forward to living in a nursing home the last years of their lives. There is a growing segment of the population that wishes to remain in their homes as long as possible. To do so however, assistance is needed from medical professionals and home health aides.
Continuing care retirement communities
Continuing Care Retirement Communities, also known as CCRCs, are well known to retirees. The premise is that residents live on a campus-like setting in facilities that change as their care needs increase. For example, a CCRC resident may begin at independent living facility, shift to assisted living, and enter a memory-care unit or nursing home. Where a resident starts depends on their overall health, mental faculties, and mobility level.
Before recently, the terms used by each individual website influence who has ownership and access to digital assets following a loved one’s death. These regulations greatly increased the number of regulations that loved ones must follow after your death. In many cases, these complex laws ended up having the result of beneficiaries losing digital assets that belong to the deceased family member.
Understanding RUFADA
Passed in 2015, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADA) governed a person’s access to online accounts when the account owner passes away or loses the ability to manage their digital accounts.
A recent story out of Virginia recently received a great deal of national attention. An 83-year-old grandmother of five and great grandmother of five received a “Notice of Lease Violation” from the management office of her assisted living facility.
What was the infraction?
It appears that Ms. Elsie Cruey had taken too many cookies from a community event. Ms. Cruery had previously run afoul of the community house rules when she took a partial gallon of milk after breakfast. She had hoped to combine the milk with the cookies she took as a late night snack.
While trusts grow in their popularity and usage, some people still encounter difficulties in creating a trust. One problem that some clients face is banks and financial institutions who create challenges in funding a trust.
While this problem is not all that common, it is still helpful to understand why these challenges can arise. This article also reviews some of the benefits that people commonly realize through the creation of a trust.
Common Challenges involved with Trust Funding
In the United States, married individuals almost always receive assets from their spouses without paying estate tax. One exception is the often-overlooked law involving marriage between a citizen of the United States and a foreign national. If you find yourself in this situation, it can create a unique challenge during estate planning.
The Foreign National Exception
Under federal law, if an American citizen is married to a foreign national and the first to die in the couple, the surviving foreign national is prohibited from using the standard marital deduction to inherit property. If the couple lives in the United States, the entire asset is subject to this regulation. If the couple lives overseas, however, only US-based assets are impacted by this law.
A California Superior Court in the case of In Estate of Holdaway recently ruled in favor of a creditor who was attempting to collecting on a deceased person’s estate. Following the individual’s death in 2013, a creditor in 2014 filed a petition for probate and seeking compensation for $90,875 on a debt. This claim was based on four loans the creditor made to the deceased individual and in-home services provided to the deceased individuals. In 2015, a trial court issued an order showing why the creditor’s petition should not be dismissed for failure to prosecute.
Later in 2015, the trial court ordered that the case should be dismissed without prejudice. In 2016, the deceased individual’s son filed a competing petition for probate, which stated that the deceased individual had left all of his assets to a family trust. The trial court later granted this competing petition. After this, in 2017, the son rejected the creditor’s claim against the estate, which led the creditor to challenge this denial.
In arriving at its decision, the Court of Appeal stated that the trial court does not have a power authorizing it to extinguish the claim of a creditor in such a way based on the mere stipulation that others are interested in the estate. As a result, the appellate court reversed matters and remanded the case to the trial court.
An increase in new types of family structures, new estate planning laws, and new types of assets has led to the use of many new non-traditional estate planning tips. Hopefully, by reviewing some of the non-traditional methods in this article, you will begin considering whether your estate will benefit from any of these strategies.
# 1 – Appoint a Trust Protector
One of the most difficult (although obvious) parts of estate planning is that after you die, your estate planning language will be permanent. A trust protector can help you make sure that your wishes for a trust are carried out. Some of the powers that you can assign a trust protector include making revisions to the trust and resolving disagreements among trustees.
Social Security Income (SSI) is a needs-based program administered by the Social Security Administration (SSA) to help people with disabilities pay for goods and services. In 2018, SSA made major changes to how Special Needs Trusts (SNT) are set-up and administered. What follows is a brief explanation of the program and the changes implemented beginning in April 2018.
Who is affected?
Approximately 7 million people receive SSI, a needs-based cash benefit to help pay for food and shelter. In 2019 the cash benefit amount for a single person was $771 per month; for couples the monthly cash benefit was $1,157. The cash benefit amount will increase in 2020, with couples scheduled to receive $1,175 per month and individuals $783 per month. For a couple to receive SSI their must be an eligible individual plus an eligible spouse.
New York Estate Planning & Elder Law Blog