Taxes that Affect an Estate

January 29, 2024

Identifying the Taxes that Affect an Estate

Estate tax and inheritance tax significantly impact an estate’s value. Estate tax is levied on the estate’s total value at death before distribution to beneficiaries. In contrast, inheritance tax is imposed on the beneficiaries based on the value of assets received. Understanding these taxes is critical for effective estate planning.

What Is Inheritance Tax?

Inheritance tax varies by state and is paid by the recipient of the inheritance. States like Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania have specific exemptions and tax rates based on the beneficiary’s relationship with the deceased and the inheritance size.

Federal Estate Tax Explained

For 2024, the federal estate tax exemption is $13.61 million per individual, with estates exceeding this threshold taxed at up to 40%. Estates valued below this limit are exempt from federal estate taxes. High-net-worth individuals benefit significantly from these exemptions but must consider state-level estate taxes, which can vary.

Impact of Tax Rates on Estate Value

Estate tax rates range from 18% to 40%, meaning that taxes can diminish a substantial portion of an estate’s value. Effective estate planning, including trusts and lifetime gifting strategies, can minimize the estate’s taxable value.

Capital Gains Tax: An Important Consideration for Estates

Capital gains tax applies to profits made from selling inherited property or investments. If inherited assets appreciate and are then sold, the beneficiary may owe capital gains tax on the profits.

Minimizing Estate Taxes: Strategies and Tips

Strategies to minimize estate taxes include using both spouses’ estate tax exemptions, spending down assets, gifting and setting up trusts. These methods can reduce the estate’s taxable value, thus lowering the tax liability.

Estate Tax vs. Inheritance Tax: Understanding the Differences

The Estate pays estate tax based on its total value exceeding federal or state thresholds. Inheritance tax is paid by the beneficiary based on the inherited amount and their degree of kinship or lack thereof to the decedent. The key difference is who bears the tax burden – the estate or the inheritor.

How Estate Planning Can Mitigate Tax Impact

Proper estate planning can significantly mitigate the impact of taxes on an estate. An estate planning attorney can help explore various strategies, ensuring compliance with tax laws and maximizing available deductions and exemptions.

Conclusion: Navigating Taxes in Estate Planning

Navigating the complexities of taxes that affect an estate is essential for ensuring a smooth transfer of wealth. Individuals can effectively manage their estate’s tax burden by understanding and planning for both federal and state estate and inheritance taxes.

For personalized advice and to develop a comprehensive estate plan that navigates these tax considerations, schedule a consultation with our experienced estate planning attorneys today.

Navigating Business Succession: A Comprehensive Approach to Business and Exit Planning

January 26, 2024

As business owners focus on day-to-day operations and growth, the thought of leaving or selling their business often takes a backseat. However, as Frank Fantozzi, a certified exit planning adviser, emphasizes, “for most owners, the business is their largest asset.” This makes succession planning an exit strategy and a crucial part of overall business planning.

The Importance of Early Succession Planning in Business Strategy

Succession planning should be an integral part of a business’s foundation. Delaying this process can lead to complications, especially when unforeseen circumstances like the “5Ds” – death, disability, divorce, disagreement and distress – arise. Early planning ensures that the business remains stable, and its value is maximized, regardless of market conditions.

Core Elements of Business Succession Planning

Strategic Business Planning and Succession

Aligning business goals with a succession plan is vital. This alignment helps identify potential successors early and integrate their development into the business’s growth strategy. As Fantozzi notes, understanding where the business is and where it needs to go is crucial in this process.

Owner Readiness and Transition

Owners must prepare both emotionally and financially for their exit. This preparation involves assessing personal financial needs post-exit and ensuring that the business can meet these needs. Fantozzi points out the importance of understanding one’s cost of living without the business and preparing accordingly.

Business Valuation and Market Readiness

Regular business valuation is key in succession planning. It’s not just about the company’s size but being the best in its class. Fantozzi suggests that achieving ‘Best in Class’ status can significantly impact the value received for the business.

Succession Planning as a Tool for Business Growth and Stability

Effective succession planning is not just about preparing for an exit; it’s a growth strategy. It ensures leadership continuity, maintains business values and can be a selling point to investors and clients seeking stability in their partnerships.

Legal and Financial Considerations in Succession Planning

Succession planning involves various legal and financial considerations. These include the transfer structure, tax implications and ensuring legal compliance. Professional advisors play a crucial role in navigating these complexities.

Challenges and Solutions in Succession Planning

Choosing the right successor, especially in family businesses, can be challenging. Solutions include establishing clear criteria for succession, involving external advisors for unbiased perspectives and considering non-family executives, where appropriate.

Conclusion

Succession planning is a dynamic and ongoing element of business planning. It requires regular review and adjustment as the business and its environment evolve. As Fantozzi concludes, “Your exit strategy connects the dots between business success and a life well lived.” Business owners are encouraged to view succession planning as a vital part of their life cycle, ensuring a legacy that endures and thrives beyond their tenure.

What Does the Executor of an Estate Do?

January 24, 2024

Being named the executor of an estate usually means you’ve lost someone close to you, and it’s a challenging time. The article “What to do when you’re the executor of an estate” from Bankrate explains what you’ll need to do and outlines the steps to stay on track.

The executor is the personal representative of a deceased person’s estate until the probate process is completed and all assets have been distributed. One of the key tasks is distributing assets according to the terms of the decedent’s will.

You can say no if you are not able or willing to serve as the executor. A secondary executor may be named in the will, or the probate judge can name a replacement. However, this task is doable if you set up a detailed checklist and work with an estate planning attorney.

Obtain the death certificate. The funeral home issues these; you’ll need them to notify banks, investment firms, life insurance companies, the Social Security Administration, the Department of Veterans Affairs and others. You’ll also need them for filing final tax returns. You’ll also need to notify Social Security to turn off payments going directly into the person’s bank account.

Locate the will and any trust documents. Hopefully, the person who notified you of the death will know where these documents are. Depending on the state where the decedent was domiciled, the last will needs to be filed within a few days to a month to a year after the death. If there are trusts, the trust documents name the trustees in charge of distributing assets owned by the trusts. Trust assets can be distributed immediately by the trustees without court approval.

Seek professional advice. After reviewing the will and trust documents, you’ll better understand how complex the estate is. You may want to consult with an estate planning attorney, CPA, appraiser, or other professionals whose expertise can help you avoid any mistakes. Trying to do it yourself could leave you personally responsible for mistakes, and the process may take far longer.

File “letters testamentary.” If the estate goes through probate, the court will legally confirm your appointment as executor with letters testamentary, sometimes referred to as surrogate certificates. These are legal documents proving your authority to act on behalf of the estate, pay bills, file tax returns, manage and distribute assets, deal with beneficiaries and open or close bank accounts.

Locate and protect assets. In the best scenario, the executor is given a complete list of assets and related information. This would include wills, trusts and paperwork related to insurance, investment accounts, prearranged funeral plans, bank accounts, real property, artwork, business interests and partnerships. A complete list of digital accounts is also needed.

Pay bills and taxes. The estate is responsible for paying debts, including income and estate taxes. If the debts exceed assets, beneficiaries are not responsible for paying them. The executor opens an estate bank account, which pays bills for the estate. Before paying debts, the executor must confirm the estate’s ability to pay. If a list of monthly bills, income and debts were not left for the executor, they’ll need to figure this out.

Don’t rush. It’s common for the executor to want to get the tasks done, distribute any inheritance to beneficiaries and have done with the process. However, if you rush and miss some important tasks, you could be found personally liable. It can take six months to a year to work through an estate. Keep careful records of all transactions and a copy of everything sent and received from creditors, beneficiaries, financial institutions, the IRS, the Social Security Administration and others.

Having an estate planning attorney can help. An attorney can also mediate between the executor and beneficiaries if things take a turn for the worse.

Reference: Bankrate (Nov. 17, 2023) “What to do when you’re the executor of an estate”

Trust Protectors: Safeguarding the Future of Special Needs Trusts

January 22, 2024

Serving as the trustee of a special needs trust (SNT) can be particularly challenging because it often requires long-term financial management of the trust, while maintaining a good relationship with the beneficiary. Furthermore, because trustees wield great financial power over the trust assets, oversight of their investment and distribution decisions is helpful. Trust protectors can add an additional layer of protection to oversee the management of a trust, supervise the trustee’s actions and remove and replace the trustee when needed. This article delves into why appointing a trust protector is a vital decision that can significantly impact the management of a SNT and guard the beneficiary’s rights.

The Case of Senator Feinstein: A Cautionary Tale

U.S. Sen. Dianne Feinstein’s lawsuit against the trustees of her late husband Richard Blum’s trust, as related in The Hill’s article, “Feinstein accuses trustees of husband’s estate of financial abuse”, highlights one reason why a trust protector may be helpful. Before her death in September 2023, Feinstein accused the trustees of withholding funds and breaching their fiduciary duties.

Through three separate lawsuits, Feinstein claimed that the trustees breached their fiduciary duties to honor the terms of the trust by not making the anticipated distributions of $5 million that were supposed to be placed into her trust in quarterly installments. She argued that the trustees’ inaction in their administration of the trust was intended to benefit Blum’s daughters at her expense, who were slated to receive $22 million each from the trust without Feinstein’s distribution.

For the late Sen. Feinstein, a trust protector may have provided the needed control over the trust assets to leverage the distribution intended by her late husband, who was the settlor. In the context of a special needs trust, where disabled beneficiaries may not be able to supervise their trustees, the role of a trust protector becomes even more critical in managing the trust.

What is a Trust Protector?

Special Needs Alliance explains in the article “Trust Protectors for Special Needs Trusts” that a trust protector is a person appointed to oversee the actions of the trustee and ensure that a trust is administered in line with the settlor’s intentions. Suppose a trustee performs in a manner that is unsatisfactory or even mismanages the trust assets. In that case, the trust protector can be empowered by the trust document to replace that person with a successor trustee. This role is particularly important in special needs trusts, where beneficiaries might not fully understand or be able to manage their financial affairs due to the nature of their disabilities.

How Does a Trust Protector Oversee the Trustee?

A trust protector works alongside the trustee, providing an extra layer of oversight in managing the trust assets according to the instructions in the trust document. They can resolve disputes, guide trustees and ensure that the trust’s administration aligns with the settlor’s intent. Trust protectors are granted various powers, including the ability to review trustee actions, including distribution decisions, replace the trustee and amend trust terms to adapt to changing laws and beneficiary needs. Their primary responsibility is to act in the best interests of the beneficiaries.

How Do Grantors Choose the Right Trust Protector?

Naming a trust protector involves considering their expertise, impartiality and understanding of the beneficiary’s needs. A third party, such as an attorney, accountant, or other professional, can often serve in this role. Family members who may be too challenged by the role of trustee also make a good choice for the trust protector. Selecting a family member who has a good relationship with the beneficiary, understands the nature of their disability and can serve as a good mediator between the trustee and beneficiary is a wise choice.

What Role Do Trust Protectors Play in Special Needs Trusts?

In special needs trusts, trust protectors play a vital role in ensuring that the trust caters to the unique needs of the beneficiary, considering their disability and inability to manage financial affairs. Their role can vary based on the trust agreement terms and state laws. The trust protector can review financial decisions or investments and sometimes force large distributions for purchases, like a house or car, based on the impact on the beneficiary. They can also help the beneficiary understand financial statements and tax documents provided by the trustee.

Is a Trust Protector Also Important to Consider for General Estate Planning?

Incorporating a trust protector into any trust adds an extra layer of protection and adaptability, ensuring that the trust remains effective and relevant over time. Only a few states have specific laws authorizing and regulating trust protectors. Therefore, it’s essential to work with an experienced estate planning attorney to carefully draft the trust to define the role and anticipate potential issues in exercising the power of the trustee or trust protector.

The Future of Trust Protectors in Estate Planning

As laws and family dynamics evolve, the role of trust protectors is becoming increasingly important in estate planning, offering flexibility and protection for beneficiaries.

Conclusion

Trust protectors offer an essential safeguard in trust administration, especially for special needs trusts. Their oversight ensures that the trust remains effective, adaptable and true to the settlor’s intentions, providing peace of mind for both settlors and beneficiaries.

Trust protectors provide essential oversight and adaptability.
They ensure that the trust’s administration aligns with the settlor’s intent.
Their role is crucial in special needs trusts for beneficiaries who cannot manage their affairs.
Trust protectors are becoming increasingly important in modern estate planning.

How Does a Living Trust Protect Your Legacy

January 19, 2024

Want to leave assets of any kind to loved ones? You’ll need to plan ahead. There are a number of options used to pass wealth to the next generation, including a last will and testament. This is a legal document designating someone to be in charge of your estate after you die and telling them how you want your assets to be divided.

Another means of passing assets along is explained in the recent article from The Motley Fool, “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family.” A living trust is a legal entity created while you are living to hold assets and designates someone to manage and disburse them based on specific directions in the trust document. You don’t have to be wealthy to have a trust.

While these two instruments sound similar, they have unique elements, making one better than another in certain situations. For many people, a living trust can benefit the individual making the trust (the grantor) and their families. Here are a few to consider.

Maintaining privacy. Wills must go through probate, a court-supervised process to review the decedent’s assets, approve their executor and rule on the will’s validity. Because the will is under the court’s review, it becomes public information. In most jurisdictions, anyone who wants to see your will can. They can also see who received what assets.

If you have concerns about maintaining your privacy or the privacy of your heirs, it may be worthwhile to create a trust. This will keep your assets and your heir’s receipt of assets private. The only people who know what’s in a trust are the grantor, the trustee who manages the trust and the beneficiaries.

Avoiding long delays. Since a trust doesn’t go through probate, it may be possible for the trustee to make distributions of assets much faster. The executor typically needs to file the will for probate and wait for the process to be concluded. Only then can they carry out the directions of a will.

When assets are in a trust, the trustee can implement the terms of the trust more quickly. This can significantly help loved ones, especially if they have paid for long-term care, hospital bills, funeral expenses, etc. If they were relying on an inheritance to cover these costs, the faster the trust can reimburse them, the better.

Managing assets if you become incapacitated. One of the biggest advantages of having a trust over a will is its value during your lifetime. A will doesn’t take effect until you die. On the other hand, a living trust with a successor trustee allows the successor to manage the trust if you become incapacitated and cannot serve as the primary trustee.

Whether you have a trust or not, you will want to name a Power of Attorney who will manage your financial and legal affairs if you cannot do so. However, financial institutions can be challenging when dealing with a POA.

Changing the trustee does not impact the trust’s status as a separate legal entity. The successor trustee steps in, and financial institutions will generally be on notice as long as the initial trust documents specify who the successor trustee will be.

Talk with your estate planning attorney about using a living trust as part of your estate plan. It may be wise to use a combination of a will and a trust to achieve your desired outcome. Do remember estate planning is not just for what happens after you die but for preparing to care for yourself and your family while you are living. A living trust could serve you and your family well, during life and after death.

Reference: The Motley Fool (Oct. 31, 2023) “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family”

Why a Trust Works for Multi-State Property Owners

January 17, 2024

If you own real estate when you die, it is most likely your estate will be required to go through probate. This can take months to years and becomes expensive, as explained in the article “Why a trust is so useful for those who own real property in multiple states” from Coeur d’Alene/Post Falls Press. However, here’s the thing to be aware of: if you own property in more than one state, your estate must go through the probate process in every state where you own property.

A few strategies must be considered for snowbirds with homes in northern and southern regions or who own out-of-state rental property.

Some families will add an intended heir to the title (deed) of the real estate while the primary owners are still living. This is rarely recommended, since it can open the door to any number of problems. If the intended heir has a financial crisis, like a lawsuit, divorce, creditor issues, etc., the jointly owned property is an attachable asset.

Another solution people try is the “Pay on Death Deed.” This is a special type of deed where the recipient gets the real property on the death of the owner. This strategy has a few problems. However, the main one is that not all states allow these types of deeds to be used.

An experienced estate planning attorney will know whether or not your state allows the Pay-on-Death-Deed.

The best solution for most people owning property in multiple states is using a living trust.

The living trust provides the same directions as a last will and testament about who should receive what assets from your estate after your death, including real property. It also names a trustee, who manages the assets in the trust and distributes them after your death.

A key reason to use a living trust is the assets owned by the trust are outside of the probate estate. These assets pass to beneficiaries according to the terms of the trust and do not go through the probate process.

Once the living trust is established, the trust may hold title to any real property, regardless of where the property is located. The trustee does not have to deal with the courts in multiple states.

There is a tendency to think trusts are only used by the very wealthy. However, this is not true. Anyone who owns real property and doesn’t want it to go through one or more probate proceedings benefits from using a trust.

An experienced estate planning attorney can establish the trust and guide you through putting assets into the trust.

Reference: Coeur d’Alene/Post Falls Press “Why a trust is so useful for those who own real property in multiple states”

Do Heirs Pay Credit Card Debt?

January 15, 2024

When you consider the average credit card balance in 2023 was $6,365, chances are many Americans will leave an unpaid credit card balance if they die suddenly. A recent article from yahoo! finance asks and answers the question, “What happens to credit card debt when you die?”

Many people think death leads to debt forgiveness. However, this isn’t the case. Some forms of debt, like federal student loans, may be discharged if the borrower dies. However, this is the exception and not the rule.

Credit card debt doesn’t evaporate when the cardholder goes away. It generally must be paid by the estate, which means the amount of debt will reduce your loved one’s inheritance. In some cases, credit card debt might mean they don’t receive an inheritance at all.

Outstanding credit card debt is paid by your estate, which means your individual assets owned at the time of death, including real estate, bank accounts, or any other valuables acquired during your life.

Upon death, your will is submitted to the court for probate, the legal process of reviewing the transfer of assets. It ensures that all debts and taxes are paid before issuing the remaining assets to your designated heirs.

If you have a will, you likely have an executor—the person you named responsible for carrying out your wishes. They are responsible for settling any outstanding debts of the estate. If there’s no will, the court will appoint an administrator or a personal representative to manage the assets.

In most cases, your heirs won’t have to pay off your credit card debt with their own funds. However, you may be surprised to learn there are exceptions:

Married people living in community property states. In a community property state, the deceased spouse is responsible for repaying credit card debt incurred by their spouse. In 2023, those states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Credit cards with joint owners. If you had a joint credit card shared with a partner or relative, the surviving joint owner is responsible for the full outstanding balance. Only joint users are responsible for repaying credit card debt. If your partner was an authorized user and not an owner, they aren’t legally responsible for the debt.

Debt collectors may try to collect from family members, even though the family members are not responsible for paying credit card debts. The debt collector may not state or imply that the family member is personally responsible for the debt, unless they are the spouse in a community property state or a joint account owner.

If a debt collector claims you personally owe money, request a debt validation letter showing your legal responsibility for the debt. Otherwise, you have no legal obligation to pay for it yourself.

When someone dies, their estate is responsible for paying debts, including credit card debt. However, debt is repaid in a certain order. In general, unsecured debt like credit card balances are the lowest priority and paid last.

Some accounts are exempt from debt payment:

Money in a 401(k) or IRA with a designated beneficiary goes directly to the beneficiary and is exempt from any debt repayment.
Life insurance death benefits go directly to the named beneficiary and go directly to the beneficiaries.

If a loved one has died and they had credit cards, stop using any of their cards, even if you are an authorized user or joint owner. Review the deceased’s credit report to learn what accounts are open in their name and the balance on each account. Notify credit card issuers and alert credit bureaus—Equifax, Experian, and TransUnion. You may need to submit a written notification, a copy of the death certificate and proof of your being an authorized person to act on behalf of the estate.

Talk with an estate planning attorney to find out how your state’s laws treat the outstanding debt of a deceased person, as these laws vary by state.

Reference: yahoo! finance (Nov. 9, 2023) “What happens to credit card debt when you die?”

Estate Planning for Children: Ensuring a Secure Future

January 13, 2024

Estate planning is a critical process for any parent concerned about the future well-being of their children. In today’s uncertain world, having a robust plan is not just a wise decision but a necessary step in safeguarding your children’s future. Drawing inspiration from Allen J. Falke’s insightful article, “To Protect Your Kids, Consider These Estate Planning Steps” (Kiplinger), this guide aims to provide a comprehensive yet easy-to-understand approach to estate planning specifically tailored for parents.

The Foundation of Estate Planning for Parents

The first step in estate planning for children involves appointing a guardian. This decision ensures that, in the event of the parents’ untimely demise, the children will be cared for by someone they trust and are comfortable with. Furthermore, establishing a trust is essential for managing the assets and finances of underage children. Trusts provide a legal framework to hold assets and ensure they are used for the child’s benefit, covering expenses like education, health, and general support.

Types of Trusts and Trust Management

Parents have options regarding the type of trust they want to set up. Revocable trusts offer flexibility as they can be altered during the parent’s lifetime, while testamentary trusts are created as part of a will and go into effect after death. Selecting the right trustee is equally important. This individual or entity will be responsible for managing the trust’s assets. To avoid conflicts of interest, the trustee should be financially astute and trustworthy, and ideally not the child’s guardian.

Financial Provisions for Children

Life insurance is a cornerstone of financial planning for children. Young families, in particular, might find level premium term policies to be an affordable option. These policies ensure a fixed premium and provide a safety net for the children. Additionally, setting up a 529 account for education savings is a smart move. These accounts offer tax benefits and can be a great way to save for college expenses, easing the financial burden when the time comes.

Legal Considerations as Children Mature

When a child turns 18, parents lose certain legal rights over them. This milestone calls for the young adult to have their own estate planning documents. A healthcare proxy, HIPAA disclosure form, and durable power of attorney are essential to ensure parents can make decisions on their child’s behalf if incapacitated. This step is crucial for maintaining a degree of oversight and care for children as they enter adulthood.

Special Circumstances in Estate Planning

For families with children with special needs, setting up a special needs trust is imperative. This type of trust allows the child to continue receiving government benefits while also benefiting from the trust’s distributions. Grandparents can also play a significant role in estate planning by setting up trusts or 529 plans for their grandchildren, adding an extra layer of security for their future.

Regular Review and Adaptation

Estate planning is not a one-time task. It requires regular review and adaptation to align with the family’s changing circumstances and needs. Wills, powers of attorney, and trusts should be updated to reflect significant life changes like births, marriages, or financial shifts.

Conclusion

Estate planning for children is a fundamental responsibility of parenthood. It ensures that children are cared for and financially secure, regardless of the future. By following these guidelines and regularly reviewing their estate plans, parents can have peace of mind knowing that their children’s futures are well protected.

Reference: “To Protect Your Kids, Consider These Estate Planning Steps” (Kiplinger), Allen J. Falke’s

Why You Should Consider a Living Trust for Your Estate Planning

January 12, 2024

When it comes to estate planning, many people think of a will as the go-to document for ensuring that their assets are distributed according to their wishes after they pass away. However, a living trust can often be a more effective tool for many individuals, offering benefits that a will cannot provide. In this article, we’ll explore why you should consider a living trust to be a cornerstone of your estate planning strategy.

What Is a Living Trust?

A living trust is a legal document that places your assets into a trust for your benefit during your lifetime and then transfers those assets to designated beneficiaries when you die. The person who manages the trust, known as the trustee, can be yourself or another person you trust. A living trust’s flexibility and control make it an attractive option for many.

Advantages of a Living Trust

Avoiding Probate

One of the most significant advantages of a living trust is avoiding the probate process. Probate can be time-consuming, costly and public. With a living trust, your assets can be transferred to your beneficiaries quickly and privately without court intervention.

Control Over Asset Distribution

A living trust lets you specify exactly how and when your assets will be distributed to your beneficiaries. This is particularly beneficial if you have minor children or beneficiaries who may not be financially responsible. You can set up the trust to distribute the assets in increments or upon reaching certain milestones, such as graduating from college.

Flexibility

Living trusts are revocable, meaning you can alter or revoke the trust as your circumstances change. This flexibility allows you to adapt your estate plan as your financial situation evolves or as you acquire or divest assets.

Incapacity Planning

Should you become incapacitated due to illness or injury, a living trust already has a mechanism for managing your affairs. The successor trustee you’ve named can step in to manage your trust assets, ensuring that your financial needs are met without the need for a court-appointed guardian or conservator.

Estate Tax Benefits

For larger estates, a living trust can provide significant tax benefits. While assets in a living trust are still subject to estate taxes, the current exemption limits are quite high ($12.92 million for U.S. residents in 2023 and $13.61 million in 2024). This means that many estates will not be subject to federal estate taxes.

Considerations Before Creating a Living Trust

Cost

Creating a living trust generally involves higher upfront costs than drafting a will. However, when you consider the potential savings in probate costs and the value of the benefits provided, the initial investment can be well worth it.

Complexity

Setting up a living trust can be more complex than drafting a will. It requires transferring ownership of your assets to the trust, which can involve additional paperwork and coordination with financial institutions.

Control

While you maintain control of your assets during your lifetime, you must be comfortable with the idea of the trust entity holding title to your assets. This is a shift in mindset for some. However, it is essential for the trust to function as intended.

Is a Living Trust Right for You?

A living trust is not a one-size-fits-all solution. It’s essential to consider your individual circumstances, the complexity of your estate and your long-term goals. Consulting with an estate planning attorney can help you determine whether a living trust is your best option.

For a more in-depth look at living trusts and their role in estate planning, I recommend reading “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?” on The Motley Fool.

Conclusion

A living trust offers numerous benefits, including avoiding probate, controlling asset distribution, offering flexibility, aiding in incapacity planning and potentially offering tax benefits. While there are considerations, such as cost and complexity, the advantages of a living trust often outweigh these concerns. If you’re looking to create a comprehensive estate plan that provides for your loved ones while giving you peace of mind, a living trust should be high on your list of options.

Remember, estate planning is a deeply personal process, and what works for one person may not be the best for another. It’s crucial to consult with a professional to tailor a plan that fits your unique situation. Click here to book a consultation with us today.

Seniors Be Careful: Elder Financial Exploitation More than Doubled Since COVID

November 10, 2023

Recent research from AARP shows the rate of elder financial exploitation has more than doubled since the start of the COVID pandemic, costing seniors age 60+ an estimated $28.3 billion annually, according to a recent article from Financial Advisor, “Rise of Financial Exploitation Presents New Challenges for Advisors.”

The size and scope of this problem make protecting seniors’ overall well-being, financial goals, and ability to meet their goals something all family members and professionals involved with seniors need to be aware of.

Becoming familiar with the most common forms of financial fraud and abuse will help seniors and their professional advisors, including estate planning attorneys, to be prepared. These include:

Power of Attorney or Fiduciary Abuse. When naming a Power of Attorney—a written consent permitting someone else to make decisions on their behalf—the person is expected to act in their best interest. Abuse of Power of Attorney or fiduciary abuse can lead to money being mismanaged or being spent on something other than a senior’s expenses and care.

Abuse by a Family Member. This is sadly common and can include identity theft, misappropriating funds for personal use, forging documents or checks, unauthorized use of a family member’s credit card, insurance fraud, financial coercion, etc.

Investment fraud. This is one of the top methods of financial exploitation and includes a number of tactics, from pump-and-dump schemes to investment opportunities offering guaranteed returns, and Ponzi schemes. It also includes affinity fraud, pretending to have things in common with a person to gain their trust, only to aggressively sell inappropriate or worthless investments once they’ve gotten the seniors’ trust.

Medicare or Medicaid fraud. This occurs in several different forms: paying for care never received, being charged multiple times for a service or medical device only received once, fraudulent claims submitted in a senior’s name, or being offered a product or service unauthorized by Medicare or Medicaid.

Homeowner Scams. These schemes include wire fraud, foreclosure or mortgage relief, reverse mortgages, home improvement and rental scams. Anyone soliciting a senior for a home improvement project because their company is “in the neighborhood” should immediately be identified as a scammer.

No one wants to see seniors exploited. However, they become more vulnerable to financial abuse as they age. While the topic of aging and money can be uncomfortable and even taboo for many, it’s a pivotal discussion to have with family members.

Reference: Financial Advisor (Sep. 26, 2023) “Rise of Financial Exploitation Presents New Challenges for Advisors”

Estate Planning Blog

Serving Clients Throughout North Central Missouri

Identifying the Taxes that Affect an Estate

What Is Inheritance Tax?

Federal Estate Tax Explained

Impact of Tax Rates on Estate Value

Capital Gains Tax: An Important Consideration for Estates

Minimizing Estate Taxes: Strategies and Tips

Estate Tax vs. Inheritance Tax: Understanding the Differences

How Estate Planning Can Mitigate Tax Impact

Conclusion: Navigating Taxes in Estate Planning

The Importance of Early Succession Planning in Business Strategy

Core Elements of Business Succession Planning

Strategic Business Planning and Succession

Owner Readiness and Transition

Business Valuation and Market Readiness

Succession Planning as a Tool for Business Growth and Stability

Legal and Financial Considerations in Succession Planning

Challenges and Solutions in Succession Planning

Conclusion

The Case of Senator Feinstein: A Cautionary Tale

What is a Trust Protector?

How Does a Trust Protector Oversee the Trustee?

How Do Grantors Choose the Right Trust Protector?

What Role Do Trust Protectors Play in Special Needs Trusts?

Is a Trust Protector Also Important to Consider for General Estate Planning?

The Future of Trust Protectors in Estate Planning

Conclusion

The Foundation of Estate Planning for Parents

Types of Trusts and Trust Management

Financial Provisions for Children

Legal Considerations as Children Mature

Special Circumstances in Estate Planning

Regular Review and Adaptation

Conclusion

What Is a Living Trust?

Advantages of a Living Trust

Avoiding Probate

Control Over Asset Distribution

Flexibility

Incapacity Planning

Estate Tax Benefits

Considerations Before Creating a Living Trust

Cost

Complexity

Control

Is a Living Trust Right for You?

Conclusion

SUBSCRIBE!

RECENT POSTS

Categories

Contact Us