Is Your Estate Really as Set as You Think?

Is Your Estate Really as Set as You Think? Next Avenue’s recent article entitled “Is Your Estate as Planned As You Think?” explains that when you pass away your executor will have many tasks to perform when settling your estate.

It’s helpful to add clarity and lessen the burden of that person’s work in advance. Look at this list of things to make sure your estate is as planned as you think it is:

Is your will current? If you’ve written your will, how long has it been since you drafted it? Have there been any major changes in your life since that time? If so, it’s likely time to update it. Review your will to make certain that it’s an accurate representation of your assets and your wishes now.

Is your will detailed? Yes, you’ve addressed the big stuff, but what about smaller items with sentimental value? You should list who gets what, to avoid fighting.

Have you set out your wishes, so they’re legally binding? Each state has different rules as to what is required for a valid will. Work with an experienced estate planning attorney to make sure your will is valid.

Are your financial affairs organized? Your executor will need to know if you have any recurring payments, as well as your account number, and online passwords. Create a list of regular monthly bills, along with your account numbers and access codes to simplify your executor’s job.

You will also need to let the executor know about any automatic deductions or charges on your credit card, internet-based subscriptions, club memberships, recurring charitable donations and automatic utility payments.

Do you have a way to distribute your personal items? You should determine how your family will divide up the possessions not explicitly listed in your will, such as the lawnmower, dishes and photographs. All of it will need to be either distributed to one of your beneficiaries, donated, or sold.

Conducting comprehensive planning of your estate with an attorney can help ensure that there’s less stress and an easy distribution of your assets.

While speaking with your estate planning attorney, ask about appointing a guardian for your minor children in your will, a healthcare directive, a living will, a HIPAA waiver and whether you should have a trust.

Reference: Next Avenue (Feb. 25, 2020) “Is Your Estate as Planned As You Think?”

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

 

Why Is Estate Planning So Important?

Why Is Estate Planning So Important? If you are new to the concept of estate planning, you can get swamped with issues fairly easily. You should still soldier on. Start with the basics, says Forbes’ recent article entitled “The Importance Of Estate Planning.”

An estate plan is a collection of legal documents that details the way in which you want your assets distributed after you die, along with how you want people you select to handle health and financial decisions, if you’re unable to do so for yourself while you’re alive.

A comprehensive estate plan written by an experienced estate planning attorney can help you feel more confident about the future because you’ll know your loved ones will be cared for and that the legacy you leave behind is the one you planned. Well thought-out planning now can help decrease any taxes and probate fees and make certain that your loved ones will have less to worry about and less stress when you are gone. However, if you don’t make plans for your estate, it can result in unintended complications for your family.

Let’s look at some of the essential estate planning documents:

  • Will: This is the standard document in your estate plans. Your will designates an executor (or personal representative) to administer the distribution of your assets as you want. In your will, you can also appoint guardians of minor children who will care for them.
  • Durable Power of Attorney: This document names a trusted family member, friend, or advisor to serve as your agent to act on your behalf in your financial and legal matters.
  • Healthcare Proxy: It will name a trusted individual to make medical decisions for you when you are unable, and permits access to your medical records (some institutions may require more documentation for full access to medical records).
  • Living Will: This is where you can state your end-of-life care wishes. Living wills can cover pain relief and whether you would want a ventilator, feeding tube or resuscitation.

You also need to regularly review and update your estate plan. There may be changes in probate and tax laws, as well as life changes, such as marriage, divorce, or the birth, adoption, or death of a family member that require a revision of your plan.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

Reference: Forbes (March 2, 2020) “The Importance Of Estate Planning”

 

Do You Want to Decide or Do You Want the State to Decide?

Do You Want to Decide or Do You Want the State to Decide? A will allows you to direct your assets to the people you want to receive them, rather than the alternative, which is relying on the laws of your state to direct who receives your assets, says the article “Will you plan now or pay later?” from the Chron.com.

A will is also the document used to name an independent executor with successors, in the unlikely chance that the first executor fails, refuses or becomes unable to serve. Your estate planning attorney will discuss the use of special trusts to provide for family members who are disabled, trusts for minors or special needs family members or even adult children.

There are three big considerations you may not have even considered that would require you to have an estate plan created in recent years to be reviewed or revised. Years ago, the federal tax exemption, which allows a person to leave a certain amount of money to beneficiaries, was much smaller than it is now.

This was a “use it or lose it” exemption. Here’s an example of how things have changed. In 1987, when the exemption was $600,000 per taxpayer, a couple would use a by-pass trust to shelter the first $600,000 upon the first to die to take advantage of the exemption. In 2020, the exemption is $11.58 million. The “use it or lose it” law is different. Therefore, if your will still has a by-pass trust for this reason, it may be best to discuss it with your estate planning attorney. It is likely that you don’t need it anymore.

You also want a will to have some control over what happens to your assets when you die. Let’s say Betty and Bob have three children. Bob dies, leaving his assets to Betty, then Betty dies and leaves all of her assets to her three children. One of the children, Bea, dies shortly after Betty dies. Bea’s will leaves all of her assets to her husband Bruce.

Bruce remarries. When Bruce dies, the share of the family’s assets that Bruce inherited from his wife Bea may be left to Bruce’s second wife or the couple may spend them all during their marriage. If Bruce divorces his second wife, she may win those assets in a divorce settlement. Would Betty and Bob have wanted their assets to go to their grandchildren, instead of their son-in-law’s second wife and children?

An estate plan can be created to protect those assets, so they remain within the family, going to grandchildren or to the children of Betty and Bob.

While most people think of an estate plan as a plan for death, it’s also a plan for illness and incapacity. A perfectly healthy person is injured in a car accident or suffers a stroke. Without having documents like a power of attorney, power of attorney for health care, living will and medical privacy documents, the family will spend a great deal of time and money trying to establish legal control over the estate.

Speak with an estate planning attorney today to update your current will or create a will and the necessary documents to protect yourself and your family.

Reference: Chron.com (January 16, 2020) “Will you plan now or pay later?”

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

 

Estate Planning: How to tell your children they’re not getting an inheritance
how to tell your children they're not getting an inheritance

Estate Planning: How to tell your children they’re not getting an inheritance

Estate Planning: How to tell your children they’re not getting an inheritance:  I saw this article yesterday that I wanted to share this with our followers.

Dear Pete, 

My wife and I are beginning to put together our estate plan, and we’ve come to an interesting conclusion. We don’t want to pass any of our money onto our adult children. They’re not bad people, and they’ve done nothing wrong. It’s just that we think our money can serve a bigger and better purpose in our community. Is there anything wrong with not leaving an estate for your children? – Robert, Columbus, Ohio.

Peter the Planner:

You can do whatever you want with your money and not feel bad about it.

You’ve hit on a topic about which I happen to be very opinionated. Your money is your money. My parents and my in-laws’ money is theirs, and I don’t possess an ounce of ownership of it.

I’ve had the opportunity to witness hundreds of wealth transfers over the past 20 or so years. Some have gone smoothly, and some have gone horribly wrong. I’ve seen seemingly simple situations get butchered with poor planning, and I’ve seen horrendously complicated situations resolved without a hitch.

To help you understand how to execute your wishes cleanly, I want to show you how these situations usually go off the rails.

The ugliest estate settlements I’ve seen involve two specific problems: The first is poor communication, and the second is outdated wishes.

Before we go much further, it’s important for you to know I’m not giving you legal advice. Please consult a licensed attorney to help you with the specifics.

What I’ve learned over the years is money and family get messy when clear expectations and appropriate communication are lacking.

For instance, let’s assume you’ve had a very lucrative career and everyone knows you’re loaded, including your presumed heirs. If you never talk about your desires for your estate, then your family and friends will probably fill in the blanks. Does this make them bad? Of course not. In some cases, your heirs will make financial planning decisions based on what you haven’t told them. They may view your silence as a polite discreteness.

Frankly, I don’t like to see people make financial planning decisions based on limited knowledge of a loved one’s finances and wishes for those finances. But it’s as common as the involuntary “bless you” after a sneeze.

The next element which complicates this matter is the natural progression of your values and wishes for your money. What seems like a good idea for your money today might not feel that way 20 years from now. And if your change in plans isn’t reflected in your estate documentation, chaos will ensue. You must walk a thin line between a commitment to your wishes and constant monitoring of the conditions around you.

If you want to leave your assets to someone other than your family, begin to communicate that plan now. I know it’s easier to let people sort out their feelings after you’re long gone, but hashing out your plan with loved ones will allow you to make them part of the process. You will, of course, want to make sure you leave funds to pay for your final expenses, and arguably a token of your appreciation for sorting out your affairs. You certainly don’t want to burden them financially while they’re grieving.

Now for the trickiest part: If your reality or your kids’ reality changes, you may want to adjust your estate plan. Maybe you think your adult children don’t need any money because they’re on solid ground, but a turn of fortune or health could leave them in a lurch. In that case, you can make the appropriate changes to your estate plan.

As you’ve learned throughout life, assumptions are bad. Don’t assume your children know your plans. Talk to them directly about what you’re thinking, and help them understand it.

You don’t owe them money, but you certainly owe them honesty.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

https://www.usatoday.com/story/money/2019/12/15/estate-planning-wrong-to-not-leave-children-inheritance/4385107002/

 

Simple Mistakes to Avoid in Estate Planning

There’s so much information available today, good and bad, that it is not always easy to know which is which. Just as we should not perform surgery on ourselves, we are asking for problems if we try to manage our estate planning without professional help. That’s the good advice from the article “Examining three common mistakes of estate planning” from The News-Enterprise.

For one thing, the roles of power of attorney agent and executor are often confused. The power of attorney agent acts in accordance with a document that is used when a person is living. The power of attorney appointment is made by you for someone to act on your behalf, when you cannot do so. The power of attorney expires upon your death.

The executor is a person who you name to handle matters for your estate after your death, as instructed in your last will and testament. The executor is nominated by you but is not in effect, until that person is appointed through a court order. Therefore, the executor cannot act on your behalf, until you have died and a court has reviewed your will and appointed them to handle your estate.

Too many people opt for the easy way out, when it comes to estate planning. We hear that someone wants a “simple will.” This is planning based on a document, rather than planning for someone’s goals. Every estate plan needs to be prepared with the consideration of a person’s health, family relationships, and finances.

Many problems that arise in the probate process could have been prevented, had good estate planning been done.

Another mistake is not addressing change. This can lead to big problems while you are living and after you die. If you are healthy, that’s great—but you may not always enjoy good health. Your health and the health of your loved ones may change.

Family dynamics also change over time. If you only plan for your current circumstances, without planning for change, then you may need to make many updates to your will.

The other thing that will occur, is that your estate plan may fail. Be realistic, and work with your estate planning attorney to plan for the many changes that life brings. Plan for incapacity and for long-term care. Make sure that your documents include secondary beneficiaries, disability provisions, and successor fiduciaries.

Create an estate plan that works with today’s circumstances, but also anticipates what the future may bring.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

Reference: The News-Enterprise (Nov. 18, 2019) “Examining three common mistakes of estate planning”

 

What To Do When a Loved One Passes Away

What To Do When a Loved One Passes Away: Whether your spouse has just passed away or you have lost your mom or dad, the emotional trauma of losing a loved one often comes with a bewildering array of financial and legal issues demanding attention. It can be difficult enough for family members to handle the emotional trauma of a death, let alone taking the steps necessary to get these matters in order.

If you are the executor or representative of the will, you first should secure the tangible personal property, meaning anything you can touch such as silverware, dishes, furniture or artwork. Then, take your time while bills need to be paid. They can wait a week or two without any real repercussions. It is more important that you and your family have time to grieve.

When you are ready, you should meet with an attorney to review the steps necessary to administer the will. While the exact rules of estate planning differ from state to state, the key actions include:

  • File the will and petition in probate court in order to be appointed executor.
  • Collect the assets. This means that you need to find out about everything the deceased owned and file a list of inventory with the court.
  • Pay the bills and taxes. If an estate tax return is due, it must be filed within nine months of the date of death.
  • Distribute property to the heirs. Generally, executors do not pay out all of the estate assets until the period for creditors to make claims runs out which can be as long as a year.
  • Finally, you must file an account with the court listing any income to the estate since the date of death and all expenses and estate distributions.

While some of these steps can be avoided through trusts or joint ownership arrangements, whoever is left in charge still has to pay all debts, file tax returns and distribute the property to the rightful heirs.

For more information about an executor’s duties, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

How Current is Your Estate Plan?

How Current is Your Estate Plan? If “nothing has changed” in your life, then you shouldn’t need to update your will. However, estate planning is more than your will. The chances that “nothing” truly has changed after even a few years is unlikely.

Forbes’ recent article, “Old Estate Plans May Be Harmful To Your Wealth,” explains that if you haven’t updated your planning after the 2017 Tax Act, a more accurate comment would be to say that “everything” has changed. That legislation made significant changes by increasing the estate tax exemption, eliminating personal itemized deductions and many other details.

There could be another change in the state or federal tax or probate law.

On your end, you or an heir may experience marriage or divorce—or a death in the family or of a vital person named in documents. Maybe you moved to a new state or welcomed a new child or grandchild. Another change is a substantial change in economic circumstances, like a change in jobs or careers. You may now have new or worsening health issues. Finally, you may have second thoughts about a bequest, or there’s been a change in relationship with a fiduciary or beneficiary.

Don’t focus on a list of the changes that should trigger an update to your estate plan. Those types of changes are often obvious. It’s the less obvious changes that don’t make the lists and that you might not even consider as requiring you to update your planning and documents.

You might not even be aware of a major change in your state’s tax laws or whether it applies to your circumstances.

It’s best to meet with your estate planning attorney any time you believe something important has occurred, like one of the events listed above. However, regardless of having a particular reason, you should meet every few years.

The bigger and more complex your estate is, the more complex your family, the more often that should be. For many, meeting every year is very prudent, certainly every year or two makes sense.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

Reference: Forbes (September 27, 2019) “Old Estate Plans May Be Harmful To Your Wealth”

 

Do Your Credit Card Debts Die with You?
Do Your Credit Card Debts Die with You?

Do Your Credit Card Debts Die with You?

Can you imagine what people would do, if they knew that credit card debt ended when they passed away? Run up enormous balances, pay for grandchildren’s college costs and buy luxury cars, even if they couldn’t drive! However, that’s not how it works, says U.S. News & World Report in the article that asks What Happens to Credit Card Debt When You Die?”

The executor of your estate, the person you name in your last will and testament, is in charge of distributing your assts and that includes paying off your debts. If your credit card debt is so big that it depletes your assets, your heirs may be left with little or no inheritance.

If you’re concerned about loved ones being left holding the credit card bag, here are a few things you’ll need to know. Note that some of these steps require the help of an experienced estate planning attorney.

Who pays for those credit card debts when you’re gone? Relatives don’t usually have to pay for the debts directly, unless they are entwined in your finances. Some examples:

  • Co-signer for a credit card or a loan
  • Jointly own property or a business
  • Lives in a community property state (Alaska, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin
  • Are required by state law to pay a debt, such as health care costs, or to resolve the estate.

A spouse who has a joint credit card account must continue to make on-time payments. A surviving spouse does not need the shock of learning that their spouse was carrying a massive credit card debt, since they are liable for the payments. A kinder approach would be to clear up the debt.

How do debts get paid? The probate process addresses debts, unless you have a living trust or make other arrangements. The probate court will determine the state of your financial affairs, and the executor, one you name or if you die without a valid will, the administrator named by the court, will be responsible for clearing up your estate.

An unmarried person who dies with debt and no assets, is usually a loss for the credit card company, if there’s no source of assets.

If you have assets and they are left unprotected, they may be attached by the creditor. For instance, if there is a life insurance policy, proceeds will go to beneficiaries, before debts are repaid. However, with most other types of assets, the bills get paid first, and then the beneficiaries can be awarded their inheritance.

The first debt that must be paid is secured debt, like the balance of a mortgage or a car loan. The administration and lawyer fees are paid next, and then unsecured debt, including credit cards, are paid.

How can you protect loved ones? A good estate plan that prepares for this situation is the best strategy. Having assets placed in trusts protects them from probate and creditors. A trust also allows beneficiaries to save time and money that might otherwise be devoted to the probate process. It also puts them in a better position, if the executor needs to negotiate with the credit card company.

Talk candidly with your estate planning attorney and your loved ones about your debts, so that a plan can be put into place to protect everyone.

Reference: U.S. News & World Report (August 19, 2019) “What Happens to Credit Card Debt When You Die?”

 

Helping Parents Be Sure Their Families are Protected

Helping Parents Be Sure Their Families are Protected:  Yes, it is old-school, but if your family is on the traditional side, headed up by a breadwinner dad who runs the finances, then you need to make plans to ensure that your family will be okay, if something should happen to you.

This advice also applies to mothers who are the main breadwinners and run their family’s finances, even though the title of this Forbes article is “How Fathers Can Make Sure Their Families Are Financially Protected.”

Do you have enough life insurance? Be sure you’re adequately insured, so your family won’t struggle to pay the bills without your income. Many employees only have enough life insurance from work to cover a year’s worth of salary, which may be enough for some families. However, if your spouse can’t make the mortgage payment on their own, and if they would be unwilling or unable to sell the home, you might want to at least make sure you have enough life insurance to pay off the mortgage. Once you know how much you need, buy a low-cost term policy for the maximum length of time you might need the coverage.

Are your beneficiaries updated on retirement accounts, annuities, and life insurance policies? This is an often overlooked issue. An outdated beneficiary designation could result in your ex-spouse inheriting most of your assets, your latest child being disinherited, or your family having to pay higher taxes and probate fees than is necessary.

Can you add a “payable on death” or a “transfer on death” form on any accounts? You can generally add beneficiaries to bank and investment accounts, saving your family from the time and cost of probate. In some states, you can add beneficiaries to your home and vehicles. Ask your bank for a “payable on death” form and your investment company for a “transfer on death” form.

Is your will drafted?  You need a will to name a guardian for your minor children in most states. It’s a good idea to have a qualified estate planning attorney help you.

Are you organized? Keep a record of where everything and everyone is. You can draft an “In Case of Emergency” folder that has copies of your will, revocable trust, life insurance policy and a summary of brokerage and bank accounts. Let your family know where to find it. You should also share your passwords to your digital accounts.

Making sure that your loved ones are protected when you are too sick or die unexpectedly, is a gift to them, and one that will be long remembered. Make some time in your hectic schedule to prepare your family and yourself for the future.

Reference: Forbes (June 16, 2019) “How Fathers Can Make Sure Their Families Are Financially Protected”

 

The Decedent’s Debts: Who’s on First?

The Decedent’s Debts: Who’s on First? Estate planning attorneys are used to family members who, for some reason, determine that credit card bills need to be paid off first, when a loved one dies. It’s not the first thing to pay, advises The Mercury its article “There is a priority of debts when you die.”

In fact, credit card debt is unsecured debt. It is, therefore, on the bottom of a list of priorities in many states. Paying debts is an important part of executor responsibilities, but there is an order to what debts must be paid first. If there are cash flow issues for the estate, this is critical information.

First, the funeral home, nursing home and un-reimbursed medical bills should be paid within six months of the death, as well as administrative expenses. Administrative expenses include the cost of probate, which is filing the will and professional fees, including the attorney’s fees, executor’s fees, account fees for final tax returns, etc. Don’t ignore the funeral bill.

Nursing home and medical bills incurred within six months of death are also important to pay. If the executor believes the medical bill is to be paid by health insurance, Medicare or Medicaid, get this in writing. If Medicaid paid for care, there may be a claim under Estate Recovery. In Pennsylvania, the Department of Human Services; Third Party Recovery, could become a creditor of the estate, when a large asset like the home is sold.

This is a time when an attorney experienced in elder law and trusts and estates can help sort through what needs to be paid and when and where the money should come from.

There are times when an executor pays for administrative expenses or the cost of the funeral from their own pocket. Anyone who does this must maintain careful records and be sure to be repaid by the estate, after an estate account is established. That also applies for any expenses paid from a joint account with the decedent.

The responsibility of the executor is to pull together the assets that will pass through the will and the bills or debts that need to be paid, then to pay the debts, including taxes and expenses of probate, then distribute the remaining funds to beneficiaries, as directed by the will.

Some assets do not pass through the will, like joint bank accounts, payable on death and transfer on death accounts, life insurance and retirement funds. With the exception of life insurance, they may be subject to inheritance taxes, if the decedent’s state of residence has such a tax.

If there are not enough assets to pay the bills, states have lists of the order of distribution. At the top of the list: costs of the administration of the estate and funeral expenses. Medical bills from the most recent six months are given higher priority than older medical bills. Credit card bills are at the bottom of the list.

Secured debt, like the mortgage on the house or a loan on a car need to be addressed. These may be sold to pay off the debt.

Executors or family members who are contacted by creditors demanding payment need to know whether they are responsible or not. An experienced estate planning attorney will be able to help you work your way through the debts and financial responsibilities of the decedent.

Reference: The Mercury (June 18, 2019) “There is a priority of debts when you die”

 

Free Virtual Estate Planning Workshop