Michigan Estate Planning Blog

Why Do I Need Estate Planning?

Many people who failed to plan their estate with the help of an experienced estate planning attorney have their assets tied up in lengthy, and often messy, legal battles that were decided by people not of their choosing.
Forbes’ recent article entitled “Everyone Needs An Estate Plan: Here's What You Need To Know” says that although many of us don't have quite as much at stake financially, it doesn't mean that estate planning is any less important. In fact, leaving a legacy, passing down wealth and helping family aren’t things that are just for the ultra-rich.
The biggest misstep is not creating an estate plan at all. This is more than just a last will and includes powers of attorney, healthcare directives, a living will and a HIPAA waiver. People put this important responsibility off because they do not want to contemplate their own death. They try to avoid the subject. Some others may have complex family dynamics, and still others are hesitant to confide their complicated relationships with a lawyer. However, all these are just excuses.
We know that life is full of changes, and people get married, divorced, have children and grandchildren, relocate to different states, change careers and get inheritances. Each of these events could make you reconsider your goals. This may necessitate an update to your estate plan.
You need to review the beneficiaries on your IRAs, life insurance policies and pensions. You should look at how you want your heirs to receive your assets and any charitable or philanthropic notions. With powers of attorney, healthcare directives, living wills and HIPAA waivers, you need to think about who you’ll entrust to make important medical and financial decisions for you, if you become incapacitated. You see these critical questions and many others are fluid and prone to change every few years as your life changes.
Remember that your assets receive different treatment from the IRS based on the type and who owns legally owns them. For example, individual retirement accounts (IRAs), Roth IRAs, traditional brokerage accounts, life insurance policies and bank accounts are different than the family home. Therefore, it’s important to be mindful of which assets are left to whom.
Don’t wait. Speak to an experienced estate planning attorney to be certain that you give this process the attention it deserves for the well-being of you and your family.
Reference: Forbes (Feb. 26, 2021) “Everyone Needs An Estate Plan: Here's What You Need To Know”

Why Is a Trust Smart Estate Planning for Farmers?

 

A will gives people the basic assurance of where farm and personal assets will go at an owner’s death. However, a trust can give you added detail and instruction, plus flexibility to transition your farm in the manner you intend.

The LeMars Daily Sentinel’s recent article entitled “Trusts can serve as important estate planning tool for farm families” says that a trust is a very useful and flexible tool for estate planning. However, it’s most likely the most underused estate management technique.

A trust is essentially the creation of another entity to hold title to assets and then writing the rules as to what should happen with those assets, while so held.

An experienced estate planning attorney will help you decide if a trust is necessary in your specific family situation. More complicated situations with multiple generations and rights of ownership and management can make a trust a wise choice.

Some of the common mistakes people make with trusts include forgetting to retitle assets into the trust now or by beneficiary designation, so they will become part of the trust at death, and making certain the parties comprehend the types of tax liabilities based on the type of trust that is created. There are two main types of trusts—living and testamentary trusts. A living trust is established by a living person, as opposed to a testamentary trust that is created in a will and goes into effect at the time of death. Living trusts can be revocable or irrevocable. Every trust has different stipulations on what the grantor can and can’t control, as well as different types of tax liability.

With the help of an experienced estate planning attorney, a trust can help keep a family member in farming and let the other family members receive ownership in the farm, land, money, or whatever assets the grantor chooses. Due to the fact that farm operations have so many moving parts and expenses, a trust can help make the transition as easy as possible and can accomplish the goals of the grantor.

You should be transparent with family members and tell each one where they stand concerning the estate. Sharing documents and holding family discussions can also help keep everyone on the same page.

Everyone should have a copy of these documents, including a will, power of attorney, or a trust because everyone in the family should know what is going on.

Reference: LeMars (IA) Daily Sentinel (Dec. 29, 2020) “Trusts can serve as important estate planning tool for farm families”

Why Is a Trust Smart Estate Planning for Farmers?

 

A will gives people the basic assurance of where farm and personal assets will go at an owner’s death. However, a trust can give you added detail and instruction, plus flexibility to transition your farm in the manner you intend.

The LeMars Daily Sentinel’s recent article entitled “Trusts can serve as important estate planning tool for farm families” says that a trust is a very useful and flexible tool for estate planning. However, it’s most likely the most underused estate management technique.

A trust is essentially the creation of another entity to hold title to assets and then writing the rules as to what should happen with those assets, while so held.

An experienced estate planning attorney will help you decide if a trust is necessary in your specific family situation. More complicated situations with multiple generations and rights of ownership and management can make a trust a wise choice.

Some of the common mistakes people make with trusts include forgetting to retitle assets into the trust now or by beneficiary designation, so they will become part of the trust at death, and making certain the parties comprehend the types of tax liabilities based on the type of trust that is created. There are two main types of trusts—living and testamentary trusts. A living trust is established by a living person, as opposed to a testamentary trust that is created in a will and goes into effect at the time of death. Living trusts can be revocable or irrevocable. Every trust has different stipulations on what the grantor can and can’t control, as well as different types of tax liability.

With the help of an experienced estate planning attorney, a trust can help keep a family member in farming and let the other family members receive ownership in the farm, land, money, or whatever assets the grantor chooses. Due to the fact that farm operations have so many moving parts and expenses, a trust can help make the transition as easy as possible and can accomplish the goals of the grantor.

You should be transparent with family members and tell each one where they stand concerning the estate. Sharing documents and holding family discussions can also help keep everyone on the same page.

Everyone should have a copy of these documents, including a will, power of attorney, or a trust because everyone in the family should know what is going on.

Reference: LeMars (IA) Daily Sentinel (Dec. 29, 2020) “Trusts can serve as important estate planning tool for farm families”

Should I Add that to My Will?

In general, a last will and testament is an easy and straightforward way to state who gets what when you die and designate a guardian for your minor children, if you (and your spouse) die unexpectedly.

MSN’s recent article entitled “Things you should never put in your will” explains that you can be specific about who receives what. However, attaching strings or conditions may not work because there’s no one to legally enforce the terms. If you have specific details about how a person should use their inheritance, whether they are a spendthrift or someone with special needs, a trust may be a better option because you’ll have more control, even from beyond the grave.

Keeping some assets out of your will can actually benefit your future heirs because they’ll get their inheritance faster. When you pass on, your will must be “proven” and validated in a probate court prior to distribution of your property. This process takes some time and effort, if there are issues—including something in your will that doesn’t need to be there. For example, property in a trust and payable-on-death accounts are two types of assets that can be distributed to your beneficiaries without a will.

Don’t put anything in a will that you don’t own outright. If you jointly own assets with someone, they will likely become the new owner. For example, this applies to a property acquired by married couples in community property states.

Property in a revocable living trust. This is a separate entity that you can use to distribute your assets which avoids probate. When you title property into the trust, it is subject to the trust’s rules.  Because a trust operates independently, you must avoid inconsistencies and not include anything in your will that the trust addresses.

Assets with named beneficiaries. Some financial accounts are payable-on-death or transferable-on-death. They are distributed or paid out directly to the named beneficiaries. That makes putting them in a will unnecessary (and potentially troublesome, if you’re inconsistent). However, you can add information about these assets in your letter of instruction (see below). As far as bank accounts, brokerage or investment accounts, retirement accounts and pension plans and life insurance policies, assign a beneficiary rather than putting these assets in your will.

Jointly owned property. Property you jointly own with someone else will almost always directly pass to the co-owner when you die, so do not put it in your will. A common arrangement is joint tenancy with rights of survivorship.

Other things you may not want to put in a will. Businesses can be given away in a will, but it’s not the best plan. Wills must be probated in court and that can create a rough transition after you die. Instead, work with an experienced estate planning attorney on a succession plan for your business and discuss any estate tax issues you may have as a business owner.

Adding your funeral instructions in your will isn’t optimal. This is because the family may not be able to read the will before making arrangements. Instead, leave a letter of instruction with any personal wishes and desires.

Reference: MSN (Dec. 8, 2020) “Things you should never put in your will”

What Do I Need to Know about Gift-Giving with the Biden Administration?

 

After the election, many people are wondering what will happen to the federal gift and estate tax exemption. Kiplinger’s recent article entitled “Making a Gift This Year? Some Key Questions to Consider,” explains that the Tax Cuts and Jobs Act dramatically upped the lifetime gift, estate and generation-skipping tax exemption to $11.58 million per individual ($23.16 million per couple). This exemption, however, is set to expire at the end of 2025. Some observers say that Democrats could significantly shorten the time frame, ending it as early as 2021.

Some families may face the possibility of losing an opportunity to transfer wealth out of their estate and save on future estate taxes sooner than anticipated. No matter when the gift is made, here are some important issues to consider.

Can I afford to give? For couples who have a significant taxable estate, gifting assets and removing future appreciation could result in some substantial tax savings for their heirs. However, just because someone has the means to make a large gift, doesn’t necessarily mean it’s the right move. Some are so eager to take advantage of the tax benefits that they underestimate their own cost of living down the road. Look at whether the grantor has enough assets to maintain their desired lifestyle. Then, think about what can be transferred without negatively impacting goals and lifestyle choices.

How Do I Structure a Gift? There are many ways of distributing assets. Remember that any transfer is gift tax-free up to the annual exclusion amount ($15,000 per person per donor for 2020). Any gift over this will count against the donor’s lifetime exemption amount. Once that’s exhausted, the gift will be subject to gift tax.

Outright Cash Gifts. This may be the most uncomplicated way of gifting, but for families with significant wealth, this could have some drawbacks. Some recipients may not be prepared to manage money, and it may demotivate them to live off their inheritance rather than becoming productive on their own.

Trusts. These are frequently used for bigger gifts to provide for beneficiaries, while using some restrictions by the grantor to protect the assets from being squandered. One plan is to distribute the trust assets in stages, when the beneficiary reaches a certain age or achieves a specific goal. Another option is to leave assets in a discretionary lifetime trust, which would maintain the assets in a trust for the beneficiary’s entire lifetime. Drafted properly by an experienced estate planning attorney, this offers a high level of protection from divorcing spouses, lawsuits, bad decisions and outside influences. It also lets grantors create a lasting family legacy for many generations.

Gifts for Education Expenses. You can also make direct payments for education or for medical expenses with no gift tax consequences.

Uniform Trust to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA). These custodial accounts are usually less restrictive than trusts and allow minor beneficiaries access to funds at age a specific age, depending on state law.

Reference: Kiplinger (Oct. 30, 2020) “Making a Gift This Year? Some Key Questions to Consider”

What Should I Know about a Living Trust?

 

A will and a living trust both can be very important in your estate plan. However, a living trust doesn’t require probate to transfer your assets.

KYT24’s recent article entitled “Fundamentals Of A Living Trust” explains that everyone who owns a home and/or other assets should have a will or a living trust. Proper estate planning can protect your family from unnecessary court costs and delay, if you become incapacitated, disabled, or die.

With a living trust, you can avoid all probate delays and related costs and make life much simpler for your family in a crisis. If you pass away, your spouse will be able to automatically and immediately continue without any delay or unnecessary expense.

When you and your spouse both die, your assets will also transfer directly to your beneficiaries.

Living trusts can save time, expense and stress for your loved ones. Speak with an experienced estate planning attorney about creating a living trust.

A trust agreement, being a legal document, must be written by an experienced estate planning attorney who has the knowledge and experience to prepare such a legal document to cover all of your needs and desires. If not properly and completely drafted, you run the risk of issues after you’re gone for your family.

After your attorney drafts your living trust, you must fund the trust, by titling or adding assets to it. If assets aren’t titled to or otherwise connected to your trust agreement, they won’t be legally part of the trust.

This totally defeats the purpose of drafting your living trust agreement in the first place.

It’s a common mistake to fail to fund a trust, which can happen as a result of poor follow through after signing the trust.

Work with an experienced estate planning attorney to complete a living trust and your entire estate plan. This includes a thorough review of your goals and objectives, as well as reviewing all estate assets to complete the funding of your trust, by transferring assets into the name of the living trust.

Reference: KYT24 (Nov. 14, 2020) “Fundamentals Of A Living Trust”

What are the Biggest Estate Planning Mistakes?

One of the largest wealth transfers our nation has ever seen is about to occur, since in the next 25 years, roughly $68 trillion of wealth will be passed to succeeding generations. This event has unique planning opportunities for those who are prepared, and also big challenges due to the ever-changing legal and tax world of estate planning.
Fox Business’ article “5 estate planning disasters you'll want to avoid,” discusses the biggest estate planning errors to avoid.
Failing to properly name beneficiaries. This common estate planning mistake is easily overlooked, when setting up a retirement plan for the first time or when switching investment companies. A big advantage of adding a beneficiary to your account, is that the account will avoid probate and pass directly to your beneficiaries.
Any account with a properly listed beneficiary designation will override what is written in your will or revocable living trust. Therefore, you should review your investment and bank accounts to make certain that your beneficiaries are accurate and match your intentions.
Naming a minor as a beneficiary. This can be a problem, if they are still minors when you die. A minor won’t have the legal authority to take control of inheritance or investment accounts until they reach the age of 18 or 21 (depending on state law). When a minor receives an asset as a beneficiary, a court-appointed guardianship will be created to supervise and manage the assets on behalf of the minor. To avoid this mistake, you can name a guardian for the minor child in your will.
Forgetting to fund a trust. Creating a trust is the first step, but many people don’t properly fund their trust after it’s established.
Making a tax mess for your heirs. A significant advantages of passing on real estate or other highly appreciated investments or property, is that your beneficiaries receive what is known as a “step-up” in basis, so that they aren’t responsible for any income taxes on the appreciated assets when they are received. The exception is when inheriting retirement accounts, such as 401k’s and traditional IRAs. Except for a surviving spouse, inheriting a traditional IRA or 401k means that you are now responsible for the taxes owed. With the recent passage of the SECURE Act, most non-spouse beneficiaries must totally withdraw a 401k or IRA within 10 years. It is deemed to be ordinary income for beneficiaries, which could result in a huge tax bill for your heirs. To avoid this, you can convert some or all of your retirement account assets to a Roth IRA during your lifetime, which lets you to pay the conversion taxes at your current income tax rate—a rate that may be much lower than your children or grandchildren’s tax rate. When you pass away, any money that is passed inside a Roth IRA goes tax-free to your heirs.
Failing to create a comprehensive estate plan. Properly establishing your estate plan now, will care for your loved ones financially, and can also save them a lot of emotional stress after you’re gone.
Talk to an experienced estate planning attorney about planning now. It can really affect your family for generations. It is one of the best gifts that you can leave your family.
Reference: Fox Business (Nov. 12, 2020) “5 estate planning disasters you'll want to avoid”

What Key Estate Planning Terms Should I Know?

Estate planning can help you accomplish several objectives, including naming guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can give more wealth to your heirs and saying how and to whom you would like to pass your estate at death.

Emmett Messenger Index’s recent article entitled “13 Estate Planning Terms You Need to Know” provides some important terms to understand as you consider your own estate plan.

Assets: This is anything a person owns. It can include a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, collectibles, art, and clothing.

Beneficiary: This is an individual or entity (like a charity) that gets a beneficial interest in an asset, such as an estate, trust, account, or insurance policy.

Distribution: A payment in cash or asset(s) to the beneficiary who’s designated to receive it.

Estate: All of the assets and debts left by a person at death.

Fiduciary: An individual with a legal obligation or duty to act primarily for another person’s benefit, such as a trustee or agent under a power of attorney.

Funding: The process of transferring or retitling assets to a trust. Note that a living trust will only avoid probate at the trustmaker’s death if it’s fully funded. A trustmaker also may be known as a grantor, settlor, or trustor.

Incapacitated or Incompetent: The situation when a person is unable to manage her own affairs, either temporarily or permanently, and often involves a lack of mental capacity.

Inheritance: These are assets received from someone who has died.

Probate: This is the orderly court-supervised process of distributing the assets of a person who has died.

Trust: This is a fiduciary relationship where a trustmaker gives a trustee the right to hold property or assets for the benefit of another party, known as the beneficiary. The trust is a written trust agreement that directs how the trust assets will be distributed to the beneficiary.

Will: A written document with directions for disposing of a person’s assets after their death. A will is enforced by a probate court. A will can provide for the nomination of a guardian for minor children.

Reference: Emmett Messenger Index (Oct. 28, 2020) “13 Estate Planning Terms You Need to Know”

Incorporating Gifting with an Estate Plan

Kiplinger’s recent article entitled “Gifting sounds pretty simple, but there are many ways to do it, and several tax ramifications to be aware of as well” explains that no matter if a gift is made this year or in future years, there are some important questions to consider.
Increased exemption. The Tax Cuts and Jobs Act significantly upped the lifetime gift, estate and generation-skipping tax exemption to $11.58 million per individual ($23.16 million per couple). It’s set to expire at the end of 2025. Thus, there’s the prospect of possibly losing an opportunity to transfer wealth out of your estate and save on future estate taxes earlier than anticipated.
When to Give. A big question is whether a person should give away assets during their lifetime or at their death. Those who opt to gift while they’re alive often do so to reduce their estate and to share in the joy of seeing the effect it makes in the lives of the recipients. Others decide to gift after death for the security of having the assets on hand, if they’re needed. Gifting after death also gives recipients time to prepare for the responsibility that comes along with inheriting wealth.
Unified Federal Estate & Gift Tax Exemption. There are many ways to distribute assets. What works for one family isn’t necessarily the wisest strategy for another. Note that any transfer is gift tax-free up to the annual exclusion amount ($15,000 per person per donor in 2020). Any gift over this amount will count against the donor’s lifetime exemption amount. After that lifetime exemption is used, the gift will be subject to gift tax.
Outright cash gifts. This appears to be the most uncomplicated way of gifting. However, for those with significant wealth, this approach could have some drawbacks. These concern the ability and experience gift recipients have to manage money, outside risks, such as a spouse or high-risk professions, and demotivating recipients to live off their inheritance, instead of becoming productive on their own. Therefore, distributing large amounts of money—particularly at a young age—is generally discouraged.
Trusts. These are used frequently for larger gifts to provide for beneficiaries, while using controls by the grantor. These parameters can include things like distributing trust assets in stages (when the beneficiary reaches a certain age or achieves a specific goal). You can also leave assets in a discretionary lifetime trust, which would maintain the assets in a trust for the beneficiary’s entire lifetime. When set up by an experienced estate planning attorney, this offers a high level of protection from divorcing spouses, lawsuits, poor financial decisions and outside influences. It can also let the grantor create a lasting family legacy for many generations.
Gifts for education or medical expenses. Direct payments for college tuition or for medical expenses have no gift tax consequences. Educational gifts can also be made by funding a 529 educational savings plan. While there are no contribution limits for a 529 plan, gifts over the annual exclusion amount can have gift tax consequences or count against the lifetime exemption. You can also pre-fund an account up to $75,000 and it will receive the same tax treatment, as if it were gifted in $15,000 increments over five years.
Uniform Trust to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA). These custodial accounts are generally less restrictive than trusts and let minor beneficiaries access funds at age a specific age depending on state of residence.
Reference: Kiplinger (Oct. 30, 2020) “Gifting sounds pretty simple, but there are many ways to do it, and several tax ramifications to be aware of as well.”

What Trusts are Available for Estate Planning?

A trust is a legal agreement that has at least three parties. The same person(a) can be in more than one of these roles at the same time. The terms of the trust usually are embodied in a legal document called a trust agreement. Forbes’s recent article entitled “Here’s What You Need To Know About The Most-Popular Estate Planning Trusts” explains that the first party is the person who creates the trust, known as a trustor, grantor, settlor, or creator.
The trustee is the second party to the agreement. This person has legal title to the property in the trust and manages the property, according to the instructions in the trust and state law. The third party is the beneficiary who benefits from the trust. There can be multiple beneficiaries at the same time, and there also can be different beneficiaries over time.
The trustee is a fiduciary who must manage the trust property only for the interests of the beneficiaries and consistent with the trust agreement and the law. Although a trust is created when the trust agreement is signed and executed, it isn’t really operational until it’s funded by transferring property to it.
A living trust, also called an inter vivos trust, is a trust that’s created during the trustor’s lifetime. A testamentary trust is created in the trustor’s last will and testament. A trust can be revocable, which means that the trustor can revoke it or modify the terms at any time. An irrevocable trust can’t be changed or revoked.
Assets that are owned by a trust avoid the cost, delay and publicity of probate. However, there are no tax benefits to a revocable living trust. The settlors-trustees are taxed as though they still own the assets. The trust assets are also included in their estates under the federal estate tax.
An irrevocable trust typically is created to reduce income and/or estate taxes. This type of trust can also protect assets from creditors. When assets are transferred to an irrevocable trust, the income and gains are taxed to the trust when they are retained by the trust and taxed to the beneficiaries when distributed to them.
Under the federal estate tax and most state estate taxes, assets that are retitled to an irrevocable trust aren’t part of the grantor’s estate. Transfers to the trust are gifts to the beneficiaries. The grantor’s gift tax annual exclusion and lifetime exemption can be used to avoid gift taxes, until gifts exceed the exclusion and exemption limit.
A grantor trust is an income tax term that describes a trust where the grantor is taxed on the income. That’s because he or she retained rights to or benefits of the property. The revocable living trust is an example of a grantor trust.
A trust can be discretionary or nondiscretionary. A trustee of a discretionary trust has the power to make or withhold distributions to beneficiaries as the trustee deems appropriate or in their best interests. In a nondiscretionary trust, the trustee makes distributions according to the directions in the trust agreement.
Another type of trust is a spendthrift trust. This is an irrevocable trust that can be either living or testamentary. The key term restricts limits the beneficiary’s access to the trust principal, and the beneficiary and the beneficiary’s creditors can’t force distributions. The spendthrift provision is used when the settlor is worried that a beneficiary might waste the money or have trouble with creditors. Many states permit spendthrift trusts, but some limit the amount of principal that can be protected, and some do not recognize spendthrift provisions.
Finally, a special needs trust can be used to provide for a person who needs assistance for life. In many cases, it’s a child or sibling of the trust settlor. It can be either living or testamentary. Critical to a special needs trust is it has provisions that make certain the beneficiary can receive financial support from the trust, without being disqualified from federal and state support programs for those with special needs.
For more about trusts and how one may fit into your estate planning, contact an experienced estate planning attorney.
Reference: Forbes (Oct. 26, 2020) “Here’s What You Need To Know About The Most-Popular Estate Planning Trusts”

How Do You Ask Parents about Estate Planning?

How do you ask your parents about their estate planning? No matter how you slice it, it’s a touchy subject to bring up. You don’t want to come off as greedy when asking your parents about their estate planning. However, you need answers to certain questions to ensure that their financial wishes are carried out and there is a smooth transition of wealth and assets. Yahoo Finance’s recent article entitled “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)” shows us how to approach this touchy subject and get the info that you need. Begin by asking your parents about whether they have an estate plan. You can tell them that they don’t need to share the numbers and that you just want to be able to follow their instructions. A good way to start this conversation, is to acknowledge how awkward and difficult this conversation is for you. You should emphasize that you don’t want to think about their deaths but are just trying to sort things out. Experts say that you’ll likely get a better reception from your parents, if you let the conversation happen organically and not schedule a time to talk. No matter how you approach the topic of an inheritance from your parents, the objective of the discussion is to make certain they have a plan in place, so there will be a clear path for whomever is left behind to go forward. You can start by asking if they have these key legal documents: A will A power of attorney; and A living will or health care directive. Ask where your parents keep these documents and how you can access them, if necessary. You should also ask if your parents have written funeral or burial instructions. You also need to ask them to give you other important information, so you can handle their finances if they are unable to or when they die. This includes account numbers and passwords, insurance policies, information on their retirement plan or pension administrator, as well as the contact information for their accountant, attorney, financial planner, or other financial professional. Reference: Yahoo Finance (Oct. 7, 2020) “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)”

Any Guess What The Top Mistake Is In Estate Planning?

The recent MarketWatch article, titled “Don’t make the No. 1 estate-planning goof,” outlines several reasons for updating your beneficiary designations. Here are a few: • A change of jobs. A job change can mean that you will need to roll over your retirement plan. If this happens, beware! Moving money from your former employer’s retirement plan into your new one or into an IRA could eliminate your beneficiaries’ claims to those assets. You should make sure you have them as beneficiaries on the new account, too. • Your primary beneficiary died. If this happens, it is a 100% no-brainer that you need to change your designation and speak with your estate planning attorney regarding any changes required in your estate plan as a result. • A change of ownership at your financial institution. This is not as uncommon as it used to be: banks and other financial institutions merge on a regular basis. When they do, they have been known to drop the ball when it comes to the beneficiary designations of older accounts. • A new child or grandchild. Do not designate a minor. If you do, a conservatorship will be set up by the state to protect the assets until the child reaches the age of majority. In this instance, a trust is the way to go for his or her benefit (with the trust as the beneficiary), so that the child can inherit your financial assets, and you will control the terms under which he or she can gain access to the funds. This is tricky business, however, and you need to work closely with your estate planning attorney to avoid potential tax pitfalls. • A beneficiary became disabled. This situation means you should change the designation or be in jeopardy of canceling his or her eligibility for Social Security’s Supplemental Security Income (SSI) benefits. Ask your estate planning attorney to create a Special Needs Trust for the disabled person's benefit and make the trust the beneficiary on your accounts. The original article discusses several other situations when it is a good idea to update your beneficiaries. After reading the full article, consider contacting your estate planning attorney with any questions.

Reference: MarketWatch, Jan. 23, 2014: "Don’t make the No. 1 estate-planning goof"

For more information, see www.jerryreiflawyer.com

Are You Afraid To Speak Of Estate Planning?

Remarkably, a recent New York Times article, titled "What’s Almost as Certain as Death? Not Talking About the Inheritance," noted that it is easier to have a will (83% do) than it is to discuss the will with your children (only half). It is even more difficult to give them details about those assets (34%). Regardless their levels of financial wealth, those surveyed were equally deficient when it comes to discussing estate plans with their children. Roughly 55% of people with more than $1 million talk to their children about an inheritance, and 53% of people with fewer than $1 million did. As you might expect, the majority of parents want the transfer of money to their children to go smoothly (84%) without creating bad feelings among siblings (66%). Why are there so many people failing to take time to let their kids know about this important subject? According to the original article, people usually do not want to discuss inheritance with their children for several reasons. • They do not want to talk about dying; • They do not want to discuss money with their children; • They do not want their children to know how much they are going to receive; and • They are concerned about their children's financial acumen. However, there is an even greater issue making the conversation about inheritance more troublesome than it was in prior generations. For example, the article describes how one 65-year-old disclosed everything to her executor, even though she was divorced without children or siblings. She learned from her experience with her mother's estate, which took the women almost two years to settle — despite the fact that it was a modest estate, and her mother had told her where everything was. Likewise, when her stepfather died many years earlier, he left everything to her mother. However, after he died, title to none of the assets had been updated. Consequently, she had to go to court three times to get it done, run an ad in the newspaper and take copies of the will to the bank to get the investments straightened out. This certainly was not what she expected. Let your children know what to expect regarding their inheritance and your other estate plans. Speak with your estate planning attorney to make sure everything is in order, and then get the family together and have that conversation.

Reference: The New York Times (August 1, 2014) "What’s Almost as Certain as Death? Not Talking About the Inheritance"

For more information, see www.jerryreiflawyer.com

 

Estate Planning for Singles and Those Without Children

The website dailycall.com recently posted an article, titled "Aging and estate planning for singles and couples without children," to help get you thinking about what you need to do to be well-prepared for the future. Here are some of the ideas suggested: • Choose your advocates wisely. Select individuals you can trust. This could be a friend, family member, or a trustee — just make sure everyone knows and will support your wishes. Select some younger people as alternates, if the people you ask are about your same age, in the event someone is not able to perform his or her responsibilities. • Determine your asset distribution. A will is an easy way to put your intentions for your assets in writing and into a binding legal document. Your estate planning attorney is well-equipped to help you draw up a will that states how and to whom you want your assets distributed. If you do not have a will, your estate may be probated according to the statutes of your state. This may or may not be what you intended for your assets. • Create a gifting plan. Another part of your estate plan can include strategies for giving monetary gifts before or after your passing. Currently, you can give up to $14,000 per person to an unlimited number of individuals without gift tax consequences. Another idea is to pay college tuition for others without gift tax liability and without using any of the annual or lifetime gift tax exclusions (provided payment is made directly to the institution). The original article includes additional helpful ideas, and your estate planning attorney can create a plan that works for you.

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What's The Best Way To Leave An Inheritance For My Children?

Last year, AARP included an article in its materials titled, "How to Leave an Inheritance to Your Kids." Among other things, the article provides several tips on how to properly set up your estate plan to leave an inheritance to your children. One tip is to manage expectations. Talk to your children so they will have a better understanding of your assets and what they may expect as their inheritance from them. Another tip is to treat all of the children equally. This will reduce cause for arguments and hurt feelings. This equal treatment should also include sharing responsibilities when it comes to settling your affairs, not just the division of assets. If, however, you decide to split your assets in some manner other than equal shares, take the time to explain your reasoning. AARP also suggests creating a trust if you are concerned with how a child will use the inheritance. A trust will allow you to control the disbursement of the assets and place contingencies or strings on the gift. This can include reaching a certain age or using the money for education. However, the experts quoted in the article warn against creating an “incentive trust,” which makes distributions based on accomplishing a specific goal. While you want your child to have the inheritance and use the money wisely, issues can arise if he or she does not go to college. For example, what if becoming a hair stylist is their chosen career path? Things happen to all of us, and there is no way to predict the exact events that will impact your child's life. Keep it simple and work with your estate planning attorney to craft your estate plan so you are leaving your inheritance to your children in an effective and sound manner.

Reference: AARP (April 24, 2013) "How to Leave an Inheritance to Your Kids"

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Will Your Spouse Inherit Your IRA?

IRAs are powerful accounts uniquely suited for retirement. No surprise, then, that there are some unique rules that go into effect when an IRA is bequeathed and inherited. Whoever the inheritor of an IRA is they will have some important choices to make fairly soon. If a spouse is inheriting, they have extra leeway that’s worth putting to good use. The sorts of things an IRA inheriting spouse ought to think about don’t make the headlines quite as often. However, DailyFinance offered a helpful guide a short time ago in an article titled “When A Spouse Inherits An IRA.” You see, a spouse has more age-based decisions than a younger inheritor like an adult child. A spouse also has different choices. For instance, a spousal IRA heir can either retitle the account into an inherited IRA or roll it into their own IRA. What to do depends a great deal on the age of the spouse that has passed and the age of the surviving spouse. After all, age determines when and if you can take distributions, and likewise affects the amount in distributions to take. To roll the IRA into your own means to simply add the balances and treat it like a normal IRA from thereon out, taking distributions based on your own life expectancy when you hit age 70½. On the other hand, if it is kept as an inherited account, you might have to immediately start taking distributions (based upon the RMD of the deceased) if the account had already begun distributions. Indeed, just the difference between one account and two accounts is worthy of consideration. The original article offers a few examples on the math that comes into play, and there are a few numbers to play with. In the end, you might say the decisions should come down on a few basics. First, the balance between income and savings. This is both a question of how much money do you need and how soon, especially for retirements and medical costs. Also, factor in taxes because traditional IRA distributions are taxable. Second, depending upon the age and needs of the inheriting spouse, you might consider where the IRA is eventually going. Will you need the money in your lifetime or will you also leave it behind? How ought you to structure that?

Reference: DailyFinance (April 22, 2014) “When A Spouse Inherits An IRA”

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Handing Down the Family Home: A Potentially Dangerous Gesture

Giving the family home to your heirs early? Take great care! This is too important a gift to get wrong, and it’s too easy to do just that. This challenge was the subject of recent article in The Wall Street Journal titled the “Dangers of Giving Your Home to Your Children.” The family home is often the most important gift you could ever give to an adult child or your adult children. It is meaningful simply by right of being the family home and its place in the family history. When given to a young couple it is also a gift of the future, and a very practical one if you don’t need the space anymore or just wish to downsize. Nevertheless, houses are as complex as they are valuable when considered as assets and potential tax burdens. Giving the house away early means moving a taxable asset around, and doing so at different times and in different ways will bring different tax burdens. These issues include weighing the consequences of a lifetime gift versus as a testamentary bequest. In the end, you need to fit the house into your overall plan, and carefully at that. Then there is even more to the financial side and the darker side of liability. A house as an asset is a magnet for creditors, divorce proceedings, and all manners of scaly legal problems that make claim or foreclose upon the house under the name of a younger, less financially stable, adult child. Giving it to them to live in forever might end up risking it to creditors, and if you intend to stay living there that means putting you out too. And what about control? Not all family problems work themselves out, after all. It is now up to the kids to keep or sell the house, even against your wishes and, again, even to evict you right out onto the curb if you intend to still live there. So, do appreciate the house and the gift of it to your loved ones. At the same time, however, also appreciate it as a difficult transition fraught with potential issues to guard against. Once you appreciate the issues you can appreciate the solutions, and depending upon the house, your heirs, and your own needs there are many powerful solutions at your disposal.

Reference: The Wall Street Journal (April 13, 2014) “Dangers of Giving Your Home to Your Children”

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Handing Down a Headache and Not a Home: Pitfalls of the Reverse Mortgage

The reverse mortgage has its benefits, especially for many retirees needing some additional cash to make ends meet in the current interest rate environment. However, as the financial community has been quick to point out, there are also some serious drawbacks to consider. The biggest drawback to bear in mind is that your heirs and loved ones may bear the brunt of the burden when it comes to those drawbacks. It is important to know how reverse mortgages work before you sign up for them. While you are at it, make you’re your heirs and other inheritors know what to expect. The issue of reverse mortgages and inheritances is not a new difficulty. Nevertheless, it does seem to be a new sour spot between borrower families and lenders. The New York Times recently reported on the situation as more and more baby boomers are finding themselves discovering that the “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs.” Whether you are the one with a reverse mortgage (or considering taking one out) or one of those on the inheriting end, this article is worth reading. Ideally, a reverse mortgage is supposed to assist an elderly person or couple by providing a “loan” against the value of their home. The home equity serves as the security for the loan. The loan is really only expected to be dealt with at the time of their passing (or, earlier should they move). The home is likely their most valuable and yet entirely non-liquid asset, after all. Following the death of the elderly person or last surviving spouse, the lender either forecloses on the house to secure repayment of the reverse mortgage or, by law, the family/inheritors are allowed to pay off the balance or some lesser settlement amount. Apparently, more and more lenders are playing hard ball. They are hiding the pay-off options, the settlement options, and even moving straight to foreclosure proceedings within weeks of the passing of the borrower. This means that many baby-boomers finally inheriting the home either will not inherit the home at all or end up fighting against a bureaucracy. Even if it’s not intentional on the part of lenders, it’s still a very real problem for even diligent heirs to face. It’s important to know the difficulties that may be inherited, whether you are set to leave the house behind or whether you’re set to inherit it and want to keep it in the family.

Reference: The New York Times (March 26, 2014) “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs”

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No Inheritance Or Compensation For Services? Lesson Learned

Even if you do not live in Massachusetts, if you are caring for an elderly loved one and may or may not be an heir apparent, there is something to be learned from a recent case in the Bay State, Cheney v. Flood (84 Mass. App. Ct. 1134, Feb. 7, 2014). There is a difference between care given out of responsibility and that given out of expectation of payment. Similarly, there is a difference between payments for services and an inheritance. ElderLawAnswers considered the Cheney case in an article titled “Don't Just Hope for an Inheritance; Get It in Writing.” In the case in question, Suzanne M. Cheney and her family offered many services to her stepfather, Anthony R. Turco. They provided these services without an actual agreement for payment. Well, Anthony passed away and Suzanne was left out of any inheritance. Suzanne was, as a result, not happy. She took the estate to court, arguing that she was due reasonable compensation for her care independent of any inheritance. The court disagreed, finding that there was no evidence she offered her care with expectation of compensation. In reality, there truly is a difference between an inheritance and compensation for services rendered. It is easy to think the worst, but in these cases oftentimes is a very legitimate conversation to be had about the needs and expectations of the caregiver as much as the needs of the elderly loved one. If you care for an elderly loved one, there are some very real ways to structure the relationship that might serve to benefit everyone. These conversations (and written agreements) are much better worked out by family in advance than by a court later on.

Reference: ElderLawAnswers (March 17, 2014) “Don't Just Hope for an Inheritance; Get It in Writing”

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Now Or Later? When Do You Give It Away To The Heirs? Saginaw MI

When is the right time to give to your children? Should you gift them assets now or wait to give it all away only after you’ve passed? It’s a good question and can be a difficult calculus. Forbes recently tackled this difficult issue a short while ago in an article titled “Should I Gift Money To My Children Now Or Later?” The original article is a sort of evolving discussion between two advisers who end up giving solid points to support either option. And, that’s fair. There really are two ways to approach this dilemma because there are different motivations in either direction. Giving now is simple and can be an entirely different act – emotionally, financially, and legally – from giving at death. It raises issue of control (how much and when), issues of need (who needs it most now and later?), trust (can they be trusted to act wisely?) and, yes, mortality (do you wish to be there to see them enjoy and make good use of your generosity?). One thing is for certain. The longer you delay making this decision, the longer time you have to mull it over. For many it will be an important transition if they choose to gift in life, emotionally or financially, and it will likely be a gift worth making wisely and to the greatest advantage of all. Competent counsel can help think with you, identify the legal or financial consequences of either option, and help you structure the best transition for you and your family.

Reference: Forbes (April 23, 2014) “Should I Gift Money To My Children Now Or Later?”

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Graduation Gifts: Gifting For A Good Future And Not Just A New Car

As we move from spring into summer, many of our young loved ones are entering their own transition periods and marking some of their first real life milestones. It is graduation season, which means it is graduation gift-giving season. If you hope to mark your loved one’s accomplishment with a sizeable gift, then how do you ensure that such gift is not squandered? To mark a milestone with a financial gift can be something of a carrot-and-stick opportunity. If that is the case, then the trick is to ensure that the gift encourages positive possibilities instead of some shiny mess with a new car smell. Reuters recently provided some advice on this timely topic in an article titled “Four ways to influence how new grads handle money.” In some ways, the advice for giving money to young adults does not hinge on the number of dollars involved. In fact, from $100 to $100 million, and however you slice it, the goal is to ensure a responsible use of the funds. Then again, with high-value gifts or full inheritances in the mix, there is that much more that can go wrong. Fortunately, there are more tools at your disposal to structure a successful gift. The advice in the original article is well worth thinking about, whether your potential gift is imminent or not for another four years of high school, college, or an advanced degree. Knowing full well the value of an approaching milestone, it is the sort of thing you can begin to plan for well in advance and doing so in the midst of this advice can really make the best of your gift.

Reference: Reuters (May 14, 2014) “Four ways to influence how new grads handle money”

Now Or Later? When Do You Give It Away To The Heirs? Mid-Michigan

When is the right time to give to your children? Should you gift them assets now or wait to give it all away only after you’ve passed? It’s a good question and can be a difficult calculus. Forbes recently tackled this difficult issue a short while ago in an article titled “Should I Gift Money To My Children Now Or Later?” The original article is a sort of evolving discussion between two advisers who end up giving solid points to support either option. And, that’s fair. There really are two ways to approach this dilemma because there are different motivations in either direction. Giving now is simple and can be an entirely different act – emotionally, financially, and legally – from giving at death. It raises issue of control (how much and when), issues of need (who needs it most now and later?), trust (can they be trusted to act wisely?) and, yes, mortality (do you wish to be there to see them enjoy and make good use of your generosity?). One thing is for certain. The longer you delay making this decision, the longer time you have to mull it over. For many it will be an important transition if they choose to gift in life, emotionally or financially, and it will likely be a gift worth making wisely and to the greatest advantage of all. Competent counsel can help think with you, identify the legal or financial consequences of either option, and help you structure the best transition for you and your family.

Reference: Forbes (April 23, 2014) “Should I Gift Money To My Children Now Or Later?”

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The Boomer Inheritance Boomerang

Much of estate planning focuses on the technical aspects of leaving behind or receiving an inheritance. Commonly, these include the tax questions, the legal questions, and the nitty-gritty details. In the midst of all of the numbers and code sections, it is easy to overlook the very emotional nature of inheritance itself. Indeed, the Boomers of today are experiencing an unprecedented period of wealth transfer. What does it mean for a Boomer to inherit these days? The New York Times approached the subject a short time ago in an article titled “When Boomers Inherit, Complications May Follow.” We all know that the Baby Boomers are a unique generation in terms of demographics and healthcare, not to mention their relationship to the very history and spirit of the country since their arrival. But did you know that Boomers are in the process of receiving the greatest inheritance windfall in the history of the country? Indeed, and that inheritance is estimated at some $8.4 trillion spread across some 79 million Baby-Boomers. Against this backdrop, what does inheriting mean? What do you do with an inheritance and how do you deal with having it? While it is easy to think of an inheritance as nothing more than money, it seems to mean something far more depending on the individual inheritor. Some may receive it as a gift to be honored, some sense spite in it, and others are quick to spend it away. The original article collects a number of voices from diverse viewpoints along the inheritance spectrum. If you are inheriting, consider pausing for a moment now to think about what that may mean to you. For that matter, this personal reflection can guide you through your own estate planning. How are you leaving an inheritance for your heirs? Why are you leaving it as you are?

Reference: The New York Times (February 10, 2014) “When Boomers Inherit, Complications May Follow”

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Unequal Inheritances – Handle With Care

Sometimes it is easy to split up your assets like pieces of the pie, with equal pieces for everyone. Sometimes, the assets just do not split that way or maybe you do not want to split them equally. For those who receive something less than equal, they may feel spurned or sense favoritism. How do you split your estate unevenly and still keep the peace in the family or, at the very least, keep it out of the courts? The uneven distribution of an estate is always a challenge. Nevertheless, when it must happen, it must happen carefully. Why might you split assets differently among your children and what are the challenges? Private Wealth investigated this matter recently in an article titled “Playing Favorites.” While “favoritism” may be the sole motivation, such is generally the exception to the rule. Commonly, after a “lifetime” of rearing their children, parents may want to level the playing field out of a sense of fairness. Whether making adjustments for unrepaid lifetime “loans,” helping children who were less “successful” financially than their siblings, or protecting an inheritance from a squandering prodigal, the reasons for unequal inheritances as unique as families themselves. Since there are so many variations on the unequal inheritance theme, the key is to ensure that your reasons are thought-through, valid, and, better yet, conveyed. Remember: inheritance and disinheritance are complicated subjects, both legally and emotionally. Depending upon your reasons, you may even find another path forward to be more useful.

Reference: Private Wealth (January 7, 2014) “Playing Favorites”

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When Money Isn’t Everything But There Is Still Something Worth Fighting Over

“Money isn’t everything.” That is what most of us think when we hear about heirs fighting over an inheritance. Nevertheless, it’s a truth many heirs know all too well. Yes, sometimes heirs fight – even reasonable and emotionally upright ones – especially because money isn’t everything. How you split up priceless family artifacts and other physical goods can start or end fights before they happen. So how do you plan to fairly spread the relics and keep the peace? Sure, there are many inheritance fights over dollars and cents. On the other hand, there are even more fights leading to protracted probate battles and just plain old hurt feelings over the disposition of physical goods, relics and family keepsakes. Unfortunately, it can be more difficult to plan for the disposition of these “things” in contrast to cash. As you begin to think about your estate in this light and figuring out who wants what, consider the insights provided in a recent article in Consumer Reports, aptly titled “How to spare your heirs a battle over your estate.” Oftentimes, physical items are difficult to split up. For example, you can’t simply tear the painting in half, divide a book, or even realistically split a set of china. In the end, in order to end a debate about which direction an item will go, to one heir or the other, you have to write it out. A will is simply not enough, generally speaking. It is hard to capture the kind of detail needed. Consequently, the matter will go straight into probate. Thankfully, many states allow you to attach a more informal writing to your will – a document that offers a list of “what” and “to whom”, and is far more easily updated. No one, however, can make the often tough distribution decisions and create the list for you. This list is one of those many little tasks to take on as part of the overall plan, and one you must keep updating as you acquire or lose this or that asset or family heirloom. This is also a topic worth discussing with your heirs. That way you, and they, will know what things they may want. After all, with heirloom fights it is an emotional connection to an object at the heart of the matter rather than its intrinsic value. Remember, it’s not always about money, because money isn’t everything.

Reference:  ConsumerReport.org (April 2014) “How to spare your heirs a battle over your estate”

Coming Up To Speed on the Inheritance and Coming Out Ahead on the Market

Inheriting a property can be an immense gift and boon to your future. Even if it’s not going to be a home to live in and is just an asset to sell, what a windfall it can be. That said, inheriting a property also brings with it certain important responsibilities, and that goes double and triple for executors or trustees. There are all sorts of liabilities, insurances, and special transactions that might become important when a piece of real property is at stake. However, foremost at issue for heirs is selling it at the right value. Indeed, responsibility for understanding the real estate market or knowing whom to trust when selling real estate is something an heir takes on. A possible case of failure to get the value of an inheritance right was brought to light in a recent MarketWatch article titled “This NYC home’s price rose 54% in a week.” The New York City home in question was inherited and then privately sold. Thereafter, the buyer’s turned around and sold it again - and the market snapped it up at 154% of the sale price given to the heirs. Perhaps the heirs knew what was going on. On the other hand, perhaps this was a classic case of heirs accidentally lighting up a fire sale in their haste to get rid of an asset. While heirs themselves can lose such a windfall, woe be it to executors or trustees who do not do their due diligence and miss the mark on a profitable sale. If you are set to inherit a property, it’s a good idea to understand the responsibilities and the factors at play. You don’t need to become a real estate expert just yet, but it is a great idea to know what you’re dealing with. What if you are planning for your estate now? Do you know the value of the properties you might pass down, and is there something that can be done to teach your heirs about maximizing the value of the property?

Reference: MarketWatch (March 19, 2014) “This NYC home’s price rose 54% in a week”

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The Hidden Powers of Family Heirlooms Mid Michigan

Objects of inheritance seem to be imbued with a special power. This is oftentimes the case, whether the family is aware of it yet or not. As one sitting down to put your intentions to paper, or even as the inheritor, it is a power worth pondering. There are always the goals and intentions of the planning parent, of course. Nevertheless, more often than not, it is the family that sees the peculiar power of an heirloom. Maybe it is something well-loved and fought over, or the heirloom may simply provide the tinder to which a disgruntled heir may choose to set match and light a fire. Recently, Forbes considered this common source of family discord in an article titled “When It's Time To Part With Family Heirlooms, And Why I Gave Away Grandpa Oscar's Violin.” You cannot make all of the mistakes in life yourself, so it is best to learn from the trials (and errors) of others. Be sure to read the original article as it is really far from a tale of fighting, divvying up, or even maximizing sale returns. No, this article provides fresh insights into the kinds of special moments an inherited object can bring to a family well after the loved one has past. Each family member had a piece of the story behind this particular violin chronicled in the original article, and, therefore, they all walked away learning a bit more about Uncle Oscar.

Reference: Forbes (March 31, 2014) “When It's Time To Part With Family Heirlooms, And Why I Gave Away Grandpa Oscar's Violin”

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To Leave An Inheritance Or Not? That Is The Question

As you plan for your retirement, for old age and even for your estate, there are just so many questions to ask and answers to give. For example, when it comes to your estate, most children assume their parents will leave it all to them. But is that your only option? A recent Forbes article takes a different tack and asks “Why Bother Leaving an Inheritance for the Kids?” What is an inheritance to you and to your loved ones? What does it mean? There are, in fact, many mature Americans who no longer see the value in leaving an inheritance to their children and, instead, intend to die broke. Interestingly, the author of the Forbes article offers a name for people of this persuasion: “Die Brokers.” Perhaps Die Brokers worry about the negative influence of free money. Maybe they would like to see a little more “hustle” out of their would-be heirs. Whatever the reason, the Die Brokers appear to be keener on enjoying their own money in their own lifetime. Are these folks in the minority? Maybe not. A recent study the financial company HSBC ranked the U.S. lowest out of the 15 countries studied in terms of parents reporting that they intended to leave an inheritance to their children. The percentage was a mere 59%. Who is to say what the right approach is? After all, cannot those who earned and saved decide what to do with the financial representation of their efforts? So, do you not want to leave an inheritance to your children? Or, a step further, do you want to ensure that there is no inheritance and join the ranks of the Die Brokers? Either way, how will you accomplish your objective? While it is easier to spend the coffers dry, if you intend to leave an intentional inheritance to your loved ones, then plan to consult with an experienced estate planning attorney. Your attorney can design a plan to ensure that your benevolence is a blessing and not a curse, sometimes for generations to come.

Reference: Forbes (February 27, 2014) “Why Bother Leaving an Inheritance for the Kids?”

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Prospective Inheritors Not Hopeful Saginaw, MI

Will there be an inheritance? According to a recent survey, it turns out that neither those planning for their estates nor the would-be inheritors themselves are quite sure, or even on the same page. CNBC recently explored this issue in an article titled “After recession, few Americans expect to inherit money” and the underlying survey conducted by Interest.com. There seems to be confusion among the ranks of would-be estate settlors and would-be inheritors regarding whether there will be any inheritance and in what amount. Interestingly, the experts disagree with both assessments. According to the results of the survey, only 27 percent of respondents age 18 to 59 said they expect to receive an inheritance from their parents or other family, with most of them offering low-ball estimates in their best-case scenarios. In reality, we are about to see the greatest wealth transfer in recent history, with baby boomers finally putting their plans to action and transferring their wealth to the next generation. Naturally, some baby-boomers are a bit optimistic. Perhaps this is because they have been planning for so long and medical costs have only recently risen so dramatically. Nevertheless, to leave an inheritance they will need to ensure this money survives their medical bills. In short, whether you are planning to leave an inheritance or will be receiving one, the amount and method of inheritance are worth understanding and planning. Either way, this may be a topic worth bringing out into the open for family discussion to everyone’s benefit. There is something to be said for realistic expectations.

Reference: CNBC (September 17, 2013) “After recession, few Americans expect to inherit money”

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Planning To Avoid Inheritance Failures Mid-Michigan

We tend to think and talk about how hard it can be to plan to give away, bequeath, or otherwise disseminate your estate. After all, you have so many personal, financial, and legal variables to consider. On the other hand, being on the receiving end of an inheritance can be just as challenging. Anyone can spend a buck and a few can spend wisely. Nevertheless, only a few will have the forethought to plan and make the most of an inheritance. If an inheritance may be in your future, then you ought to read a recent Morningstar article titled “How to Plan for an Inheritance: 6 Things You Need to Know.” As the title suggests, there are six things you need to know according to Morningstar to make the most of the opportunity. While the original article goes into more depth, here are the six things for you to ponder: 1. What kind of assets will you receive? 2. How will the assets be distributed? 3. Have you done your own financial planning first? 4. When you get the money, what are your priorities? 5. What are your obligations? 6. Is the inheritance transparent? You can plan entirely on your own assumptions, but that can be a tricky way to plan. This is where communication is key – intergenerational communication. It is a wise estate planner who educates prospective inheritors regarding these “6 things” identified by Morningstar and likely even more. In the end, planning for the transfer of an inheritance can be a family activity with one generation giving to and guiding the next generation.

Reference: Morningstar (August 30, 2013) “How to Plan for an Inheritance: 6 Things You Need to Know”

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Planning To Avoid Inheritance Failures Saginaw, MI

We tend to think and talk about how hard it can be to plan to give away, bequeath, or otherwise disseminate your estate. After all, you have so many personal, financial, and legal variables to consider. On the other hand, being on the receiving end of an inheritance can be just as challenging. Anyone can spend a buck and a few can spend wisely. Nevertheless, only a few will have the forethought to plan and make the most of an inheritance. If an inheritance may be in your future, then you ought to read a recent Morningstar article titled “How to Plan for an Inheritance: 6 Things You Need to Know.” As the title suggests, there are six things you need to know according to Morningstar to make the most of the opportunity. While the original article goes into more depth, here are the six things for you to ponder: 1. What kind of assets will you receive? 2. How will the assets be distributed? 3. Have you done your own financial planning first? 4. When you get the money, what are your priorities? 5. What are your obligations? 6. Is the inheritance transparent? You can plan entirely on your own assumptions, but that can be a tricky way to plan. This is where communication is key – intergenerational communication. It is a wise estate planner who educates prospective inheritors regarding these “6 things” identified by Morningstar and likely even more. In the end, planning for the transfer of an inheritance can be a family activity with one generation giving to and guiding the next generation.

Reference: Morningstar (August 30, 2013) “How to Plan for an Inheritance: 6 Things You Need to Know”

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Testing The Inheritance Of Test Tube Babies Born Post-Mortem Saginaw, MI

Planning an inheritance is hard enough when you know all of your family members. Matters can get dicey when planning to include future generations yet unborn. However, the current science of fertility, preservation, and in vitro fertilization has stretched inheritance laws to new limits when it comes to determining “unknown heirs.” The New York Times noted some of the challenges in an article titled “Fertility Treatments Produce Heirs Their Parents Never Knew.” There was a time, not so long ago, when family lines split and branched like a tree. This was known, literally, as per stirpes in the estate law canon. Inheritance law has adhered to this concept. Problems arise when family lines do not follow neatly branching blood ties in a one-to-one relationship. More specifically, what happens when certain kinds of fertility treatments or preservations allow “genetic material” to be preserved well past the lives of the genetic mother or father? Are these children still heirs? The law is muddled, but generally yes. In rich estates this means a new potential heir to lay claim to assets. In even more modest estates, this means a new eligible child for their parents’ benefits under various governmental programs. So, how do you plan for the heir you will never know? In the first instance, it likely will all hinge on why you preserved genetic material in the first place. Many now preserve eggs prior to undergoing chemotherapy or another treatment, and some simply before menopause. Many men preserve genetic material before going to war or, likewise, just in case. If you have preserved your genetic material, then what are your reasons for doing so? In some instances you can create a plan to protect what you would want protected. If nothing else, this is a subject with very deep and broad implications.

Reference: The New York Time (August 30, 2013) “Fertility Treatments Produce Heirs Their Parents Never Knew”

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Prospective Inheritors Not Hopeful Saginaw, MI

Will there be an inheritance? According to a recent survey, it turns out that neither those planning for their estates nor the would-be inheritors themselves are quite sure, or even on the same page. CNBC recently explored this issue in an article titled “After recession, few Americans expect to inherit money” and the underlying survey conducted by Interest.com. There seems to be confusion among the ranks of would-be estate settlors and would-be inheritors regarding whether there will be any inheritance and in what amount. Interestingly, the experts disagree with both assessments. According to the results of the survey, only 27 percent of respondents age 18 to 59 said they expect to receive an inheritance from their parents or other family, with most of them offering low-ball estimates in their best-case scenarios. In reality, we are about to see the greatest wealth transfer in recent history, with baby boomers finally putting their plans to action and transferring their wealth to the next generation. Naturally, some baby-boomers are a bit optimistic. Perhaps this is because they have been planning for so long and medical costs have only recently risen so dramatically. Nevertheless, to leave an inheritance they will need to ensure this money survives their medical bills. In short, whether you are planning to leave an inheritance or will be receiving one, the amount and method of inheritance are worth understanding and planning. Either way, this may be a topic worth bringing out into the open for family discussion to everyone’s benefit. There is something to be said for realistic expectations.

Reference: CNBC (September 17, 2013) “After recession, few Americans expect to inherit money”

For more information, see www.jerryreiflawyer.com

 

 

When Baby Boomer Retirees Inherit Mid-Michigan

Some people are just too young to be receiving inheritances. After all, a young person might not know what to do with it. Of course, young inheritors are not the only ones who cannot handle a sudden inheritance. Can you say “baby boomers”? The baby boomer generation is set to receive unprecedented inheritances in the coming years. Do baby boomers and retirees know what to do with their inheritances? Not always, but there is time to learn. The subject of inheritance in retirement was considered in a recent MarketWatch article titled “When retirees inherit; tips for newfound wealth.” The article provides some basic pointers to get you started. For the most part, this issue is simply a case of social reversal. Historically, retirees and inheritors have historically held very separate roles. Retirees planned inheritances for their inheritors, but they were not themselves inheritors! With age and population groups moving through time as they are today, baby boomers are about to receive the greatest generational wealth transfer in recent history. The essential nugget of wisdom to glean from the original article, however, is to force yourself to a calm moment and some further planning. Retirees have less time to make the best of an inheritance. Nevertheless, many retirees are facing some very difficult financial decisions themselves. Long-term care and future health care costs are good for starters. Using the inheritance correctly and wisely is the key. So, if you are only holding the inheritance for a short time yourself, what does that mean for your existing estate plans? This unprecedented wealth transfer has the potential to be a blessing or a curse. Are you ready?

Reference: MarketWatch (July 16, 2013) “When retirees inherit; tips for newfound wealth”

For more information, see www.jerryreiflawyer.com

 

When Baby Boomer Retirees Inherit Saginaw, MI

Some people are just too young to be receiving inheritances. After all, a young person might not know what to do with it. Of course, young inheritors are not the only ones who cannot handle a sudden inheritance. Can you say “baby boomers”? The baby boomer generation is set to receive unprecedented inheritances in the coming years. Do baby boomers and retirees know what to do with their inheritances? Not always, but there is time to learn. The subject of inheritance in retirement was considered in a recent MarketWatch article titled “When retirees inherit; tips for newfound wealth.” The article provides some basic pointers to get you started. For the most part, this issue is simply a case of social reversal. Historically, retirees and inheritors have historically held very separate roles. Retirees planned inheritances for their inheritors, but they were not themselves inheritors! With age and population groups moving through time as they are today, baby boomers are about to receive the greatest generational wealth transfer in recent history. The essential nugget of wisdom to glean from the original article, however, is to force yourself to a calm moment and some further planning. Retirees have less time to make the best of an inheritance. Nevertheless, many retirees are facing some very difficult financial decisions themselves. Long-term care and future health care costs are good for starters. Using the inheritance correctly and wisely is the key. So, if you are only holding the inheritance for a short time yourself, what does that mean for your existing estate plans? This unprecedented wealth transfer has the potential to be a blessing or a curse. Are you ready?

Reference: MarketWatch (July 16, 2013) “When retirees inherit; tips for newfound wealth”

For more information, see www.jerryreiflawyer.com

 

When Baby Boomer Retirees Inherit

Some people are just too young to be receiving inheritances. After all, a young person might not know what to do with it. Of course, young inheritors are not the only ones who cannot handle a sudden inheritance. Can you say “baby boomers”? The baby boomer generation is set to receive unprecedented inheritances in the coming years. Do baby boomers and retirees know what to do with their inheritances? Not always, but there is time to learn. The subject of inheritance in retirement was considered in a recent MarketWatch article titled “When retirees inherit; tips for newfound wealth.” The article provides some basic pointers to get you started. For the most part, this issue is simply a case of social reversal. Historically, retirees and inheritors have historically held very separate roles. Retirees planned inheritances for their inheritors, but they were not themselves inheritors! With age and population groups moving through time as they are today, baby boomers are about to receive the greatest generational wealth transfer in recent history. The essential nugget of wisdom to glean from the original article, however, is to force yourself to a calm moment and some further planning. Retirees have less time to make the best of an inheritance. Nevertheless, many retirees are facing some very difficult financial decisions themselves. Long-term care and future health care costs are good for starters. Using the inheritance correctly and wisely is the key. So, if you are only holding the inheritance for a short time yourself, what does that mean for your existing estate plans? This unprecedented wealth transfer has the potential to be a blessing or a curse. Are you ready?

Reference: MarketWatch (July 16, 2013) “When retirees inherit; tips for newfound wealth”

For more information, see www.jerryreiflawyer.com

 

“Fair Or Equal” Inheritance – It’s in the Eye of the Beholder

If you are planning your estate, or have already inked your planning, how will your loved ones react to their inheritance? Are you providing a “fair” or an “equal” inheritance? While it is your estate, it may be helpful to communicate your wishes and rationale now to avoid misunderstandings (or worse) later on. The Washington Post recently explored this subject in an article titled “Dividing up money can cause divisions in families.” The article tracks the case of a certain individual who can’t help feeling resentment over the estate plan his parents have created. He believes the basis for the estate plan is his chosen “lifestyle.” He is gay and his married sister is not. He has no children and she does. The parents of these adult children have chosen to leave an inheritance “directly” to their grandchildren, instead of “through” their daughter. The grandchildren are set to each inherit one-sixth of the estate, with the children splitting the remaining two-thirds. The author of the article concludes thusly regarding the inheritance planning of these parents: “And yet, this is their prerogative. It’s their money.” What about your own family and heirs – will they understand? What can you do to make yourself understood? Then again, if instead you are the one inheriting, have you thought it through from everyone’s perspective? Properly thinking through your estate planning objectives and then committing it to proper legal instruments can be an arduous task. That is why too few otherwise responsible adults actually follow through on their intentions. One of the most common estate plans is one that lies unsigned in a desk drawer. When all is said and done, it is your estate and you may distribute it as you wish. Period. Nevertheless, long-term family harmony often hinges on communicating your wishes while you are alive and able to explain them. Surprise is only a good thing when it comes to birthdays and military maneuvers.

Reference: The Washington Post (March 29, 2013) “Dividing up money can cause divisions in families”

For more information, see www.jerryreiflawyer.com

 

529 Education Savings Plans Proliferate Saginaw, Michigan

Planning for the next generation, and for what you will leave them, often varies depending on what you have and what your loved ones will need. In today’s economy, the rising costs of education are leading many families to choose the “gift of education” as a fundamental goal in their wealth transfer planning. As a result, it is no surprise that recent analysis by Morningstar Inc. found a sharp increase in contributions to Section 529 plans in 2012. Reuters reported on these findings in an article titled “Morningstar: 529 college savings plans up in 2012 despite some lags.” The article notes a 529 plan is a tax-advantaged account that encourages savings now toward exorbitant college costs later. That said, not all plans are alike and the study found some were far better than others, and some were even of questionable worth. The final analysis: although 529 education savings plans as a whole underperformed against some mutual funds, 2012 saw a 25% rise in 529 plan assets against a 13.4% gain in the S&P index.

Reference: Reuters (April 22, 2013) “Morningstar: 529 college savings plans up in
2012 despite some lags”

For more inforomation, see www.jerryreiflawyer.com

 

Have “The Talk” with Your Children Now Saginaw, Michigan

There are a number of “talks” you have with your kids. We all are familiar with the infamous “the talk” – and a few others that are more easily avoided than had. Add “the inheritance talk” to the short list of intergenerational talks too important to avoid. So, how do you prepare and execute this too-important-to-avoid chat? To be blunt: there is no easy answer. Why? Because so much of the talk depends on what you have to leave, who is going to manage it, who is going to inherit it, and how soon are they going to get it? The Wall Street Journal recently offered a pep-talk for estate planning parents in a recent article aptly titled, “The Inheritance Conversation. Ugh.” One of the key reasons for this essential intergenerational communication is to prepare the inheriting generation for the attending responsibilities. One challenge, of course, is that any “inheritance” carries the risk of robbing a developing person of their work ethic. In short, what makes you, your assets, and your heirs unique? That is what needs to be understood and communicated. The sooner you have the inheritance talk, the better it will be for all concerned.

Reference: The Wall Street
Journal (April 19, 2013) “The Inheritance Conversation. Ugh.”

For more information, see www.jerryreiflawyer.com

 

Watch Out for “State” Estate Taxes Saginaw, Michigan

Budgets are set to battle once more on Capitol Hill in the near future. All considered, estate planners are fairly content with the last battle and the federal estate tax laws that went into effect with the American Taxpayer Relief Act (ATRA) at the beginning of the year. Consequently, most taxpayers have been spared the federal estate tax. But don’t forget about what your state has in store for you. As a recent Kiplinger article warns, the state level transfer taxes have not fallen away like the federal transfer tax. The article, titled “Beware States With Their Own Estate Taxes,” notes that fully 21 states (plus the District of Columbia) currently impose some kind of transfer tax, whether a death tax, an inheritance tax, or both simultaneously. Furthermore, if you pay too much attention to the federal tax, then you might think you are home free in terms of exempt amounts. Unfortunately, state taxes are, generally, set with much lower exemption amounts. The Federal tax has been permanently set at a rather generous range with a $5.25 million exemption amount. On the other hand, New York starts taking a piece of the estate pie at $1 million. If you live in a death tax state, now is the time to be planning to avoid or minimize the impact. For that matter, too, where do you plan your retirement? Crossing into a new state for retirement or late-in-life care is not just about passing the “Welcome” sign on the highway. Accordingly, remember to consider how your move will affect your assets and overall estate plan. Then again, how much do you trust Congress and their idea of a “permanent” estate tax law? Already these new budget battles have given platform to new calls for a change in the “permanent” federal estate tax exemption. In fact, the Obama Budget Proposal would reduce the just-agreed-upon “permanent” exemption from $5.25 million to $3.5 million (The Washington Times here).

Reference: Kiplinger
(May 2013 issue) “Beware States With Their Own Estate Taxes”

For more information, see www.jerryreiflawyer.com

 

Do You Really Have Enough Life Insurance? Saginaw, Michigan

It’s not too hard to properly insure a car or a valuable piece of art, because the value of the object can be determined, even in a shifting market. What about insuring your life for those who depend on you for financial support? How do you insure your life and how do you even begin thinking about life insurance? For starters, it is essential to note that life insurance can be a complex subject, especially when it comes to the right “kind” and the right “amount” of insurance. So what questions do you ask? Sometimes the important questions don’t come up when you click through those online life insurance calculators, and unfortunately, less so with some insurance brokers. Forbes recently addressed this important issue in an article titled “What A Life Insurance Calculator Can't Tell You.” Generally speaking, insurance exists so you can pay a “premium” now that you can afford to protect against the risk of a catastrophic event later that you cannot afford. When it comes to life insurance, of course, the risk is to your family and loved ones if you were no longer there to care for them. Life insurance is a potent tool in this regard, but it is far from the only tool to protect for your loved ones in the event of your death. The original article provides an excellent analysis of common “needs” that life insurance can protect. In the end, however, nothing can replace the advice and counsel of an experienced and qualified life insurance professional.

Reference: Forbes (March
28, 2013) “What A Life Insurance Calculator Can't Tell
You”

for more information, see www.jerryreiflawyer.com

 

“Fair Or Equal” Inheritance – It’s in the Eye of the Beholder Saginaw, Michigan

If you are planning your estate, or have already inked your planning, how will your loved ones react to their inheritance? Are you providing a “fair” or an “equal” inheritance? While it is your estate, it may be helpful to communicate your wishes and rationale now to avoid misunderstandings (or worse) later on. The Washington Post recently explored this subject in an article titled “Dividing up money can cause divisions in families.” The article tracks the case of a certain individual who can’t help feeling resentment over the estate plan his parents have created. He believes the basis for the estate plan is his chosen “lifestyle.” He is gay and his married sister is not. He has no children and she does. The parents of these adult children have chosen to leave an inheritance “directly” to their grandchildren, instead of “through” their daughter. The grandchildren are set to each inherit one-sixth of the estate, with the children splitting the remaining two-thirds. The author of the article concludes thusly regarding the inheritance planning of these parents: “And yet, this is their prerogative. It’s their money.” What about your own family and heirs – will they understand? What can you do to make yourself understood? Then again, if instead you are the one inheriting, have you thought it through from everyone’s perspective? Properly thinking through your estate planning objectives and then committing it to proper legal instruments can be an arduous task. That is why too few otherwise responsible adults actually follow through on their intentions. One of the most common estate plans is one that lies unsigned in a desk drawer. When all is said and done, it is your estate and you may distribute it as you wish. Period. Nevertheless, long-term family harmony often hinges on communicating your wishes while you are alive and able to explain them. Surprise is only a good thing when it comes to birthdays and military maneuvers.

For more information, see www.jerryreiflawyer.com

 

 

“Fair Or Equal” Inheritance – It’s in the Eye of the Beholder Saginaw, Michigan

If you are planning your estate, or have already inked your planning, how will your loved ones react to their inheritance? Are you providing a “fair” or an “equal” inheritance? While it is your estate, it may be helpful to communicate your wishes and rationale now to avoid misunderstandings (or worse) later on. The Washington Post recently explored this subject in an article titled “Dividing up money can cause divisions in families.” The article tracks the case of a certain individual who can’t help feeling resentment over the estate plan his parents have created. He believes the basis for the estate plan is his chosen “lifestyle.” He is gay and his married sister is not. He has no children and she does. The parents of these adult children have chosen to leave an inheritance “directly” to their grandchildren, instead of “through” their daughter. The grandchildren are set to each inherit one-sixth of the estate, with the children splitting the remaining two-thirds. The author of the article concludes thusly regarding the inheritance planning of these parents: “And yet, this is their prerogative. It’s their money.” What about your own family and heirs – will they understand? What can you do to make yourself understood? Then again, if instead you are the one inheriting, have you thought it through from everyone’s perspective? Properly thinking through your estate planning objectives and then committing it to proper legal instruments can be an arduous task. That is why too few otherwise responsible adults actually follow through on their intentions. One of the most common estate plans is one that lies unsigned in a desk drawer. When all is said and done, it is your estate and you may distribute it as you wish. Period. Nevertheless, long-term family harmony often hinges on communicating your wishes while you are alive and able to explain them. Surprise is only a good thing when it comes to birthdays and military maneuvers.

Reference: The Washington
Post (March 29, 2013) “Dividing up money can cause divisions in
families”

For more information, see www.jerryreiflawyer.com

 

The Beauty and the Beast of the Estate Tax Rules Saginaw, Michigan

We certainly have been through some uncertain times regarding estate taxes over the past several years. From changing exemption amounts, to a one-year repeal, to “band-aid” fixes, the only thing certain about the federal estate tax was its uncertainty. Until now. Congress finally gave us permanent estate tax rules; and by permanent, I mean that except for a built in inflation factor for the estate and gift exclusion, the provisions don’t expire or change with the passage of time. Interestingly, despite its potentially onerous tax bite, the federal estate tax remains largely a voluntary tax. As Forbes points out in a recent column, “Want to Avoid the Estate Tax Cliff? Five Ways to Help,” the new provisions still allow savvy planners to substantially reduce, or even eliminate, federal estate taxes -- even on estates that far surpass the $5.25 million exemption. Forbes goes on to list five powerful strategies for reducing federal estate taxes: Gifting. The new provisions allow you to make tax-free lifetime gifts up to an amount equal to the federal estate tax exemption, currently $5.25 million. Straightforward gifting of assets while you are alive removes them -- and their future growth or appreciation -- from your estate tax-free. Discounting. There are still a myriad of techniques that can be used to discount the value of stock for transfer purposes. These techniques center on lack of control/minority interest and/or lack of marketability, and can create a substantial valuation discount. Loans. Family business owners can take advantage of historically low interest rates for loans used to execute sales of stock. As Forbes points out, “currently, a parent can sell shares of the family-owned business to the child for a fixed long term interest rate as low as 2.52%, and not incur a gift tax because of the loan rate.” Insurance. Properly purchased and owned, life insurance can be used to provide the cash needed to pay any federal estate taxes that may remain after other planning strategies are exhausted. Remember, the cash-call on federal estate taxes is due within nine months of the business owner's death. Charitable Giving. If the family is not interested in the business, but is interested in the wealth it has generated, a charitable gift of a business interest may be a savvy way to dispose of the business while also saving on taxes. As Forbes points out, “there are still a number of tax-smart ways to transfer the business to a nonprofit organization, and fulfill your estate planning goals.” The beauty of the new estate tax rules is their permanence. The beast is their sting -- 40 percent on the first dollar over the exemption amount (currently $5.25 million). Failure to wisely plan for a potential estate tax liability can be disastrous for your family and/or your business.

Reference: Forbes (January 30, 2013) “Want to Avoid the Estate Tax Cliff? Five Ways to Help”

For more information, see www.jerryreiflawyer.com

 

The Basis for the Basis of Inherited Stock Saginaw, Michigan

The cost of anything is actually a little hard to pin down. Ask any accountant or business owner. Nevertheless, “cost basis” is incredibly important when it comes tax time, especially if it was a bequest or gift. So what if you inherited stock? It’s fairly common, but how do you determine the value for that? That’s the complicated calculus of the “cost basis.” If you think about it, stock represents a value that is forever changing on the basis of the market itself. Those ups and downs of the market can make it a bit difficult to calculate actual gain over the life of one individual. The wrinkle of how to count for those changing values when stock passes from the hands of that one individual to another makes the wrinkle more challenging. For a basic introduction to “cost bass” and the value of inherited stock, consider reading a recent Kiplinger article titled “Cost Basis for Inherited Stock.” When arranging your estate, planning for your assets means understanding what those assets are and their value to your heirs. Accordingly, this notion of cost basis is vital to you and your heirs.

Reference: Kiplinger (April [edition], 2013) “Cost Basis for Inherited Stock”

For more information, see www.jerryreiflawyer.com

 

Will Your Estate be a Blessing or a Curse? Saginaw, Michigan

There are two sides to every coin. Will the inheritance you leave to loved ones be a blessing or a curse? In the end, it’s up to you. If you are looking for some guidance on this matter, then consider two intriguing articles by the same author. Each article reaches a different conclusion. The articles recently appeared in Forbes and are titled “Why Family Wealth Is A Curse” and “Why Family Wealth Is A Blessing.” Interestingly, the author is a member of the family that founded the Georgia-Pacific Corporation. The curses the author identifies are “too much too soon,” “too much of a financial focus,” and “ingratitude.” In contrast, the author notes blessings that include “love,” “choices,” and “gratitude.” So, how does one help ensure that your own inheritors land safely on the “blessings” side? The author recommends family “open communication” and “teamwork” between and among family members, as well as intergenerational. While the article is written from the perspective of an “inheritor,” there is much to glean from it when planning your own estate. One thing is certain: the failure to prepare your loved ones for their inheritance, then to protect them from it (and it from them) can be hazardous to your inheritors and to your wealth.

References:

Forbes (March 1, 2013) “Why Family Wealth Is A Curse”

Forbes (March 4, 2013) “Why Family Wealth Is A Blessing”

For more information, see www.jerryreiflawyer.com

 

The Difficulties of Disinheritance Saginaw, Michigan

When it comes to estate planning, most people focus on the distribution of their assets to heirs ... but some are more concerned with not distributing assets to certain heirs. If you are among them, be forewarned that disinheritance, for whatever reasons, can lead to hurt feelings and even contentious legal battles. A recent article from Reuters, “Disinheriting someone is not easy,” illustrates some of the many reasons people choose not to leave assets to certain heirs. The reasons are as varied as the assets involved, and may include anything from hard feelings within a family to a desire to "equalize" wealth among adult children with differing degrees of financial success. If you choose to disinherit someone, realize that some classes of heirs have legal rights that cannot be violated, such as spouses and minor children. Reuters explains it well: Just as you cannot tell a divorce judge that you refuse to split assets or pay alimony, you cannot leave your surviving spouse's house and all of the money to a child or some other family member. Using language to disavow and disinherit your spouse will not help ... the spouse can waive the will and receive whatever he or she is entitled to under state law. Minor children are also protected by the courts. Whatever financial support the minor is entitled to receive, he or she will get, assuming the money is available. Regardless of the reason(s) you may have to disinherit someone, be sure to discuss them with your estate planning attorney. Properly drafted legal documents can help ensure your wishes are followed, as well as prevent unintended consequences such as hurt feelings or court battles. Simply put, “disinheritance” is not necessarily an ugly word, but it can turn ugly even when you do it for the right reasons if not done properly.

Reference: Reuters (January 31, 2013)
“Disinheriting someone is not easy”

For more information, see www.jerryreiflawyer.com

 

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Tailor Your Estate Plans for Each Child Saginaw, Michigan

When it comes to our children, we want to equally divide our time, love, and attention the best that we can. And when we think about our estate plans for our heirs, equal division may be the first thing that comes to mind. But it’s not always the best solution as not all heirs are created equal in terms of their needs. This subject was taken up by Business Insider in a recent article titled “Not Every Good Estate Plan Treats Its Heirs Equally.” Sometimes you can divide everything equally and everyone is happy. However, sometimes the “even-Steven” approach may not be the best approach in every situation. For example, the recipients may have very different needs, some may be more deserving than others, or the estate assets may not be subject to easy division. Have you ever marveled at how children who grew up under the same roof and eating at the same table can be so different? It can be as simple as the differences between two individuals: one adult child is wealthy while the other is a starving artist; one child is disabled or otherwise needs medical aid while the other is as healthy as a horse. Then, there are the other kinds of inequities. For example, one child has received financial help from you over the years while the other toughed it out. The list of differences can go on and on, but it’s worth a look at the selection pulled together in the original article before taking a good look at your own plans and family dynamics. Life can be complicated, and family can be complicated with it. When it comes to planning for your estate, you might need to proportion and tailor the inheritances responsibly. Be sure to seek competent legal counsel to help you plan for each unique child.

Reference: Business Insider
(October 26, 2012) “Not Every Good Estate Plan Treats Its Heirs
Equally”

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Tailor Your Estate Plans for Each Child Saginaw, Michigan

When it comes to our children, we want to equally divide our time, love, and attention the best that we can. And when we think about our estate plans for our heirs, equal division may be the first thing that comes to mind. But it’s not always the best solution as not all heirs are created equal in terms of their needs. This subject was taken up by Business Insider in a recent article titled “Not Every Good Estate Plan Treats Its Heirs Equally.” Sometimes you can divide everything equally and everyone is happy. However, sometimes the “even-Steven” approach may not be the best approach in every situation. For example, the recipients may have very different needs, some may be more deserving than others, or the estate assets may not be subject to easy division. Have you ever marveled at how children who grew up under the same roof and eating at the same table can be so different? It can be as simple as the differences between two individuals: one adult child is wealthy while the other is a starving artist; one child is disabled or otherwise needs medical aid while the other is as healthy as a horse. Then, there are the other kinds of inequities. For example, one child has received financial help from you over the years while the other toughed it out. The list of differences can go on and on, but it’s worth a look at the selection pulled together in the original article before taking a good look at your own plans and family dynamics. Life can be complicated, and family can be complicated with it. When it comes to planning for your estate, you might need to proportion and tailor the inheritances responsibly. Be sure to seek competent legal counsel to help you plan for each unique child.

Reference: Business Insider (October 26, 2012) “Not Every Good Estate Plan Treats Its Heirs Equally”

For more information see www.jerryreiflawyer.com

 

Whitney Houston’s Estate and an Inheritance Dispute

The intention of giving an inheritance to your kids or loved ones is to help their future, not to hinder them. Unfortunately a large inheritance can sometimes hurt more than help, depending on how the distribution is set up. This is a common issue with the wealthy and successful celebrities, as is the case with Whitney Houston’s Estate. The inheritance left by Whitney Houston is chronicled by CNBC in an article titled “When $20 Million Is Too Much to Leave the Kids.” Without delving too much into the case, the passing of Whitney Houston has set her 19-year-old daughter, Bobbi Kristina Brown, up to receive a staggering $20 million. Recently, Houston’s mother and manager, who are the executors of the Houston estate, have filed a petition to restrict the inheritance payments on the basis that these were simply too large. According to the petition, such inheritance payments would make Bobbi too easy a target for predators, or worse, enable Bobbi to devolve into a bad lifestyle. Taking the petition at face value, this consequence would not have been Whitney’s intention. Regardless of Whitney’s intention, the article recommends an excellent alternative that she could have employed to protect the inheritance from Bobbi and Bobbi from the inheritance. This alternative is called a “discretionary trust.” Using this type of trust would have allowed for instructions on how the funds were to be managed and released. The article also provides some practical pointers, like teaching your children financial responsibility at an early age and reviewing (and revising) your estate plan from time to time.

For more information see www.jerryreiflawyer.com

Reference: CNBC (October 19, 2012) “When $20 Million Is Too Much to Leave the Kids”