In October 2022, singer and songwriter Jerry Lee Lewis passed away. He left behind a rock legacy, a big family, and an estate valued in the multi-millions.
We often follow the lives of celebrities and dream of having their lavish lifestyles. Even so, famous folks experience many similar estate planning challenges just like the rest of us. This includes implementing the optimal tax strategy, as well as distributing assets to loved ones when deceased.
Lewis’s passing has prompted many to look back fondly at his music career. Aside from that though, it begs the question: what will shake out with his sizable estate? Let’s play “what if” in the following estate planning scenarios and see which lessons can be learned for celebrities and regular folks alike:
Jerry Lee Lewis lived a long life, passing at the old age of 87. Like other rock icons of the last century (Elvis, Johnny Cash), Lewis’s lifestyle put hard miles on him. Even though he engaged in substance abuse and experienced health problems, he outlived other leading rockers and was deemed “the last man standing from the dawn of rock and roll” by New York Magazine.
You likely have heard his greatest hit, “Great Balls of Fire”, but Lewis had a variety of other hits that earned him four Grammy wins. Lewis was inducted into both the Rock & Roll Hall of Fame and Country Music Hall of Fame. His music career spanned for an astounding seven decades, and he produced over forty albums.
At his death, Lewis left behind his seventh wife, Judith Coglan Lewis, and four of the six surviving children from his marriages. In the years preceding his death, a feud ensued between Lewis and his daughter, Phoebe, and her husband, Ezekiel Loftin. Lewis sued the Phoebe and her husband in 2017 for taking advantage of his financial status. Charges were later dropped.
Lewis had his fair share of financial missteps, filing for bankruptcy in 1988. The filing included more than $3 million in debts. This came from over $2 million in IRS dues, unpaid medical bills, and tens of thousands in attorney fees. Still, his net worth at the time of his death was estimated to be in the range of $10 million and $15.4 million.
As professional estate planning attorneys, we evaluate the life and legacy of Jerry Lee Lewis through the perspective of our field of expertise. While his tumultuous and fast-paced lifestyle may not align with our personal experiences, we recognize the valuable insight it provides in regards to common estate planning issues. In this discourse, we will address several issues related to Lewis's estate that are particularly noteworthy.
Based on what we know about Lewis’s relationship with his daughter, Phoebe, it is likely that he will remove her from any consideration to receive a portion of his assets. Mississippi law permits individuals to disinherit beneficiaries under a legitimate basis. However, it is worth noting that Phoebe has established her own career in the music industry and has done quite well for herself, potentially rendering any inheritance unnecessary.
The distribution of assets for his remaining children is yet to be determined. While most parents opt for equal distribution of assets among their children, the unique circumstances of the Lewis family dynamic require analysis of what is equal versus what is fair.
We can take lessons away from the Lewis family and apply them to our own situation. Each child has financial needs unique to their lives. While some are able to obtain financial freedom, others may struggle. A family’s financial picture can change for better or for worse between the birth of children as well. For instance, a younger child might enjoy a slightly more affluent lifestyle than the older siblings, simply because their parents have worked their way to a better career milestone and are making more money now than they were. This is why dividing assets equally within an estate plan is not always the fairest method for all parties.
Will He Transfer Assets to His Surviving Spouse?
Lewis was married a staggering seven times, and each came with their own controversies. His seventh wife was by his bedside upon his death. Will he distribute assets to her?
In the case that Lewis did not have a will in place, intestate law would take effect. This would automatically make his spouse the primary beneficiary. It’s not a far off scenario – about two thirds of American adults fail to compose a will. Rock icons can fall into this category if they fail to do some basic estate planning before death.
In the case that Lewis did have a will, he still could have left his entire estate, or a portion, to the surviving wife. If he just left a portion, those assets could be given to her as a lump sum, or distributed over time under the management of the estate’s trustee.
Lewis also would have had options deciding the type of trust set up. The pros and cons of these different types are as follows:
Even though death and taxes are certain in life, estate taxes may not fall into this category. It all depends on the breadth of the estate at Lewis’s death, and the amount of the lifetime exemption used.
The lifetime gift and estate tax exemption denotes the maximum amount of wealth that an individual can pass on to their heirs without incurring estate taxes. Such transfers can take place either as gifts throughout a person's lifetime or at the time of their death.
In 2022, the federal lifetime gift and estate tax exemption threshold was $12.06 million, rising to $12.92 million in 2023. Based on the conservative estimate of Lewis's net worth, the value of his estate is lower than the 2022 lifetime exemption limit. Therefore, in the absence of any previous use of his exemption during his lifetime, he may not require workarounds for estate taxes if his spouse does not posses substantial personal assets. It is worth noting that for couples, the exemption amount doubles to $25.84 million in 2023.
Mississippi does not impose an estate tax, so Lewis's estate does not need to worry about such a tax being levied. However, if Lewis had passed away in a state that imposes an estate tax, or if he had owned property in such a state, then his estate might have been subject to an additional tax due to his death. The exemption amount and tax rate for each state's estate tax are determined by that state.
In the case that Lewis's spouse does possesses assets and wealth that surpass the individual gift and estate tax exemption limit, it may behoove her to ask for the deceased spousal unused exclusion (DSUE) amount. The DSUE provision, aimed at helping the surviving spouse, allows the unused exemption amount of the deceased spouse to be transferred to the surviving spouse in case the former did not use up the entire exemption amount. In simpler terms, Lewis's wife would be eligible to receive a DSUE amount of $2.06 million, calculated based on the 2022 exemption of $12.06 million and Lewis's estimated estate value of $10 million.
Based on the 2022 exemption of $12.06 million and an estimated estate value of $10 million, Lewis's wife would be eligible for a DSUE amount of $2.06 million.
It is impossible to know for sure how Jerry Lee Lewis chose to allocate his wealth. His wife and children may be as uninformed as the general public, and there could be unexpected elements in his estate plan that have yet to surface.
The Lewis family requested that instead of sending flowers for his funeral, contributions be made in his name to either the Arthritis Foundation or MusiCares. It raises the question whether Lewis may have chosen to allocate a significant portion of his estate to these or other charitable organizations instead of his family.
Only time will tell how it’ll play out. We may not even get the full story if he left his estate to charity, since it’s common for charity information to stay private.
Ironing out an estate plan is not exclusive to rock-and-roll icons. Regardless of the complexities of your estate, it is essential to develop a plan for the distribution of your assets, settling your debts, and ensuring that your wealth goes to the individuals and causes that matter to you. Contact Anderson, Dorn & Rader’s office today to arrange a consultation with our team of estate planning attorneys and begin planning for the future.
You may have seen the popular ABC TV show, Modern Family, which follows a fictional extended family through life’s ups and downs. It’s a relatable show that addresses many issues life throws our way. Just like the families depicted in the series, it’s crucial to have an estate plan to protect loved ones when someone passes, or becomes unfit to manage their finances. Let’s take a look at some situations that arise in Modern Family episodes and how you can apply the lessons learned to your own situation.
Throughout the Modern Family series, various family members start and own businesses. No matter if it’s a passion project, investment opportunity, or owner-operator business, it should have a plan for the future.
The “traditional” lines in familial relationships can get blurred within multi-generational, blended families. For example, Jay often refers to Manny as his son, even though he’s technically his stepson (the child from Gloria’s previous marriage). Though he loves Manny as if he were his own son, the law doesn’t take these emotions into account when it comes to transferring business interests. Legally, stepchildren have no right to inherit a stepparent’s money or property. In situations like these, documentation should be created if you want any assets to be left to stepchildren, including your business interests.
There are several minors within the Modern Family series that would require guardianship in the event that their parents pass away. While Manny expressed a desire to serve as Joe's guardian if Gloria and Jay pass, it is important for them to formally nominate their preferred guardian in their wills. However, it should be noted that such a nomination is not binding and may be contested by others. To mitigate the risk of potential disputes and ensure Joe's wellbeing, it is advisable for Jay and Gloria to have open and candid discussions with both of their families to prevent any possibility of a guardianship dispute.
Rex and Lily would also require guardianship in the event of the passing of their parents. Without a comprehensive estate plan in place, it is possible that a dispute may arise between the families of Cameron and Mitchell. While Lily has spent a significant portion of her life close to Mitchell's family, later in the show, Lily and Rex move to reside with their parents in Missouri, which is closer to Cameron's family. As a result, Rex may develop a stronger bond with Cameron's family as he grows up, which could potentially lead to conflicts between the Pritchett and Tucker families if guardianship for these two children becomes necessary. To avoid such a scenario, it is imperative for Cameron and Mitchell to establish an appropriate estate plan.
Finally, it is important for Poppy and George to have designated guardians in the event that their parents, Haley and Dylan, die. While the family may not possess significant financial assets or property, it is crucial for them to establish basic plans for their children's care, including the appointment of primary and alternate guardians. When the show ends, Haley and Dylan have moved out of Phil and Claire's residence, but still nearby. Furthermore, it is noteworthy that Farah, Dylan's mother, has become increasingly involved in their lives since the announcement of Haley's pregnancy. It is possible that she may express an interest in assuming the role of guardian for the children in the event of the untimely passing of Haley and Dylan.
As a parent of minor children, it is crucial to consider and plan for the potential guardianship of your children should the unexpected occur. While no one can replace a parent's love and care, it is essential to formally nominate a guardian in a last will and testament or through a separate legal document, as permitted by state laws. While the court ultimately makes the final determination, clearly expressing your wishes can provide peace of mind. Furthermore, discussing potential guardianship with your family members in advance can help prevent disputes and ensure that your wishes are respected upon your passing.
As all married couples know, the question of what will happen in the event of the first spouse's death is important to consider. For couples like Phil and Claire, who have built and accumulated their assets during the course of their marriage, it may be natural to consider everything they own as jointly held. Both partners may wish for all assets to pass to the surviving spouse. However, without proper planning, leaving assets outright to a surviving spouse can leave them vulnerable to creditors and predators.
It is important to consider potential scenarios, such as the possibility of a scam artist exploiting a well-intentioned person like Phil, or a successful woman like Claire remarrying and unintentionally disinheriting her children by leaving all assets to her new spouse. To safeguard assets for the surviving spouse, regardless of whether it is their first or third marriage, a qualified terminable interest trust can be an effective solution. This designation of trust allows the surviving spouse to receive annual income from the trust and withdraw principal for specific purposes like health, support, education, and maintenance. It also grants you the power to choose where any remaining assets are allocated upon the death of your spouse.
In blended families, as seen on Modern Family, there are a variety of options for inheritance distribution. As Jay prepares his estate plan, it is important for him to consider how he wishes to divide his assets among his family members. This includes his spouse, two adult children from a previous marriage, a minor son, and an adult stepson, as well as five grandchildren and two great-grandchildren. He will need to make decisions regarding the distribution of assets, including the beneficiaries, the amount, and the timing of the distribution. He will need to consider whether it would be more beneficial to provide for his current spouse, Gloria, through a trust during her lifetime, with the remainder going to his other children, Claire, Mitchell, and Joe upon her death — or if his children should receive their portion of the inheritance while Gloria is still alive. Additionally, he will need to decide if he wants to provide for his stepson, Joe, or leave that responsibility to Gloria if she survives him.
When formulating an estate plan, it is crucial to consider the legal requirements for providing for a surviving spouse. In certain jurisdictions, there is a mandated minimum inheritance, known as the elective share, that must be allocated to the surviving spouse. Additionally, in states with community property laws, a surviving spouse may be entitled to a portion of assets acquired during the marriage. While one may assume that their spouse can support themselves without an inheritance, it is essential to have open and thorough discussions about estate planning, and document any agreements to ensure that the surviving spouse's rights and needs are protected. Without proper planning and documentation, a surviving spouse may unhinge the distribution of assets if they have not been taken into consideration within the estate plan, and haven’t waved their minimum inheritance rights.
Phil and Claire will need to evaluate their familial situation and devise a plan to distribute their assets and financial assets among their children and grandchildren. Given the distinct characteristics of their three children, it is important to consider each of their individual needs. For example, Haley, as a mother of two, may require a larger portion of the inheritance to support her children. Phil and Claire may elect to set aside a specific fund for their grandchildren. Alex is very smart and her education or employment opportunities may not require as much financial support. Luke, on the other hand, may benefit from trust money to pursue his business ventures and protect him from impulsive decisions.
An estate plan is a valuable tool for ensuring the protection of assets and financial resources for families of all sizes and backgrounds, not only those depicted in television series. The estate planning attorneys at Anderson, Dorn & Rader are dedicated to collaborating with families to develop a personalized plan that reflects the unique characteristics woven into each one. Reach out to our knowledgeable staff to see how we can assist your modern family with a financial plan for the future.
As the new year begins, many of us take stock of our past and plan for the future. As a business owner, it can be easy to get caught up in daily tasks and neglect long-term planning for your its succession. However, it's essential to consider the impact and legacy you want your business to have in the future. If you want to make a positive difference for future generations, consider using a new, lesser-known planning tool called the purpose trust.
A traditional trust is a legal agreement between three parties: the grantor, trustee, and beneficiary. The grantor funds the trust with financial or property assets, and the trustee manages these assets according to the terms of the trust, for the benefit of designated beneficiaries. A charitable trust is an exception, as it is created for a charitable purpose but does not have specifically designated beneficiaries. Recently, some states have introduced the concept of noncharitable purpose trusts, also known as purpose trusts.
These trusts can be established for most lawful purposes, as long as they are reasonable and do not violate public policy. However, in some states, they can only be used for specific purposes such as pet care or grave site maintenance. To ensure that the trustee carries out the grantor's stated purpose, the grantor must appoint an independent “enforcer” who can petition the court if duties outlined in the trust are not performed. A trust protector can also be appointed to modify the trust if necessary, for example, to add beneficiaries or modify the jurisdiction where the trust is effective. The goal of a purpose trust is not primarily to minimize taxes or transfer wealth efficiently (though this can be achieved), but to ensure that the grantor's purpose is fulfilled.
You’ve likely heard of, or own clothing from the company, Patagonia. In September 2022, Yvon Chouinard, the the company’s founder, transferred the voting stock of the $3 billion outfitter to a purpose trust to extend his mission of fighting the planet’s environmental crisis. In an excerpt on the Patagonia website, he stated that the company's continued purpose is to "save our home planet." After finding out his children did not have a desire to take over the family business, Chouinard decided not to sell the company, as he worried a new owner might have different values and his employees would not retain job security.
The Patagonia Purpose Trust, guided by the family and advisors, took over the voting stock of the company to ensure that its values were upheld and profits were used for their environmental protection goals. A 501(c)(4) nonprofit organization was also set up to transfer the nonvoting stock into. The nonprofit will be funded by Patagonia’s dividends, amounting to an estimated $100 million a year, for environmental protection efforts. The business interests were not donated to a charity, so they will encounter an estimated $17.5 million in gift tax, and no charitable deduction will be available to Chouinard. However, he effectively avoided $700 million in capital gains taxes and substantial estate tax liability upon his death.
A purpose trust can be a viable option for business succession planning if you own a profitable company and want to keep its mission alive. Similar to the Chouinard family, you can ensure that your company's values and mission continue to be upheld for many years to come, and that your employees have job security. This is particularly useful if you do not have children who are interested in running the business or if your children do not share your values. The terms of a purpose trust can ensure that future management adheres to the trust's purpose, and also ensures that the company remains private and that values remain a priority over profit.
From a business standpoint, what are your goals for the future? If you're interested in using your wealth for the benefit of a cause you’re passionate about, you might want to look into a purpose trust. Contact the team at Anderson, Dorn & Rader to see if this planning option is suitable for you.
One of the most crucial decisions within your life plan is determining who will manage the estate when you aren’t around anymore, or are no longer fit to do so. This individual is called the successor trustee.
A large amount of responsibility comes with being nominated as a successor trustee. Because of the complicated procedures, time they’ll need to dedicate, and risks that the trustee will assume, many people consider hiring a professional fiduciary (like an estate planner) to be their trustee.
When hiring a professional to carry out the duties of trustee, you’ll first need to ensure that a terms of engagement document is signed by both parties to lay out the relationship between parties. This should be a separate document from the one that identified their duties as your estate planner. You’ll also want to look for the following qualifications (and potential red flags) when deciding whether to carry out the relationship.
Even if a professional fiduciary is able to draft a thorough terms of engagement document, that doesn’t necessarily mean that they have all the resources to properly administer your trust. Don’t be afraid to ask questions. You need to make sure that the professional fiduciary takes the trustee role seriously, and that they are well-equipped to take on the job. The below functions should be well within the wheelhouse of a satisfactory candidate for a professional trustee:
Even seasoned estate planners who take on the responsibility of trustee can find it difficult to fit your estate management into their schedule. The professional that you hire should be responsive and accessible. This is especially the case when the trust requires critical decisions related to distributions, beneficiary health, maintenance, education, and support. After you are gone, your beneficiaries will also be in constant contact with your hired fiduciary, and even more so when distributions are made on a reoccurring basis.
For instance, one of your beneficiaries may request an early distribution to cover the expenses of a medical procedure. Or perhaps the period to take advantage of government benefits is drawing to a close on a distribution amount. Will your professional trustee pick up the phone or quickly respond to an email in these instances? Proper communication is paramount to deal with the intricacies of your family’s lives, and your hired trustee must be passionate about providing them service when needed.
No one can work forever, and even your hired trustee must retire at some point. Do they have a plan in place to transfer their responsibilities to another individual or firm? The terms in your trust should outline who will become your successor trustee, but in the case that your trust puts the power of designating the successor in the hands of the trustee, you’ll want to ask your professional fiduciary who will fill their place if something happens to them.
Some instances will require your professional trustee to communicate with the caregivers of your beneficiaries. This could be due to the beneficiaries being minors, or perhaps because they are disabled.
In the case that a beneficiary is not able to manage the assets they’re gifted in the trust, it’s vital that your professional trustee can communicate with caregivers to understand their needs and translate them into actionable estate management duties.
After applying these suggestions when considering a third party trustee, notify them of your decision to nominate them. Even though they won’t assume trustee duties until you are unfit or no longer around, being proactive benefits the planning of your affairs.
Your nominated professional trustee does not necessarily have to accept the position. But by finding out if they’d like to take on the responsibilities sooner than later, you’ll have ample time to make an educated decision if you need to select another individual.
If you have any questions about selecting a professional estate planner to be your trustee, the knowledgeable attorneys at Anderson, Dorn & Rader can help. We offer Trustee Services to help guide you in the process of choosing an adequate trustee to carry out your wishes and preserve your family’s wealth.
Schedule a FREE consultation to discover the benefits of choosing Anderson, Dorn & Rader as your professional corporate trustee. We look forward to serving your needs with a high level of professionalism, experience, and dignity to match the values of your family.
Life is riddled with unknowns. While you can control certain events like whether you’ll have kids or tie the knot, other milestones are not as easy to predict. Life comes at your fast, and sudden, unexpected events can muddle with estate planning. For this reason, make sure your plan is flexible.
You’re able (and it’s recommended) to update your estate plan as you age. But when you die, the plan is more or less set in stone. To curb some of the unknowns that will inevitably arise, it’s a good idea to incorporate milestones into your estate plan. Milestones trigger predetermined decisions that allow you to exercise your wishes and pass wealth to loved ones after you are gone.
If-then statements are pre-made decisions that are carried out based on conditions you set. They are commonly seen in legal documentation, including estate plans.
The concept of if-then statements is straightforward. If a certain criteria is met, then a given action is put into motion. Take the following for example: “If my spouse and I both pass away before our children are fit to care for themselves, [Relative X] will be nominated as their rightful guardian."
Clauses like these can reserve some of the power you have over otherwise unforeseen circumstances. They also offer more flexibility than more simplistic declarative statements (“I leave the property in The Hamptons to my oldest daughter”, for example).
If-then statements can build upon one another to account for various future scenarios. So you could say, “If my spouse and I both pass away before our children are fit to care for themselves, [Relative X] will be nominated as their rightful guardian. If [Relative X] is unfit to care for our children, [Friend A] will assume the nomination.”
The beauty of conditional actions in your estate plan is that they can take on many forms. Aside from if-then statements, you can also include asset allocations or gifts that are put into motion when certain milestones are reached.
Check out these events that are commonly incorporated to trigger gifts or distributions to loved ones:
These milestones are just the tip of the iceberg, and can be combined or modified. For instance, you may give wedding money to a child while storing the rest of their inheritance within a trust. This ensures that if they get divorced, the assets you pass on won’t fall into the hands of their ex-spouse.
You can also set up your estate plan to allocate more money to an individual if the value of that asset increases over time. Remember that if-then statements can be used to make such allocations flexible. The possibilities are endless.
It's a complicated process to populate your estate plan with if-then statements and other milestones. But the work you do up front will protect you and your loved ones from the unknowns of the future.
The professional estate planners at Anderson, Dorn & Rader will help to put all your wishes in writing. To simplify the proceedings, we can spell out your conditional statements with flow charts and diagrams. These can then be integrated into your estate plan to provide clarity after you’re gone.
Whether you’re looking to update an existing life plan, or start from scratch, our estate planning lawyers can help. Contact Anderson, Dorn & Rader to secure your plans for the future and continue your legacy after you’re gone.
Tune into any major news outlet and you’ll hear about the rise – and tumultuous market behavior – of cryptocurrency. As with any other investment that fluctuates with market activities, there are risks associated with buying and selling. No matter how savvy you may be, if you’re investing in crypto, you need an asset protection plan. The following stories show just that.
Christopher Matthews was a businessman and investor who came from good money on both his mother and father’s sides of the family. He passed away in March 2018, and at that time, his estate was valued at $180 million. A large chunk of that came from a hearty $1.8 million investment in cryptocurrency. He bought his shares through a company we’ll call Wayve.
Matthews death was sudden, and as a result, his estate plan was outdated and didn’t reflect his cryptocurrency trading. After some phone calls with Wayve, it was found that the logins to his crypto accounts were kept on several devices throughout the country, and under other names as well.
Luckily, Wayve worked with Matthews’ lawyers to grant access to these accounts, though this isn’t always the case for account holders with less financial esteem. Even though Matthews’ estate attorneys caught a break with the accessing the accounts, they weren’t as fortunate in distributing the Wayze funds in a timely manner. It was critical that the accounts be liquidated to pay off outstanding debts and other tax obligations.
However, Matthews had a withstanding agreement with Wayze that put a cap on how many cryptocurrency shares could be sold at once. This agreement set back the distribution of affairs because the shares had to be sold over the course of several months. While this allocation process was going on, the remaining money in Matthews’ crypto account values began to plummet (thanks to a large dip in the market). By the end of the allocation process, the accounts lost about two thirds of their value, dropping the total value of the estate to less than half of what it was at the time of Matthews’ death.
Matthews’ surviving benefactors would have been in much better financial shape if he had disclosed his crypto trading activities with the individuals involved in his estate. Essentially, they would have been able to sell off shares sooner and reap the benefits of his investments. Instead, the market dip wiped out a large portion of the investments. Furthermore, an actionable plan should have been in place to avoid relying on the cryptocurrency investments to pay off the outstanding debts in the first place.
Steven Thompson was in tune with the latest trends and became an early Bitcoin investor. He even shared this knowledge with online followers in a 2011 video, which earned him 7,000 Bitcoin. Steve set up a digital hard drive with the company SteelLock to store his Bitcoin – in other words, a digital wallet.
It’s been over a decade since Steven set up his SteelLock, and he’s been busy mining Bitcoin ever since. Unfortunately, he’s forgotten the password that he initially used to configure it, and SteelLock only allows 5 wrong attempts before locking the account. To date, his portfolio amounts to well over $100 million. Unless he can remember the login credentials, he’ll never get to see or sell the money accrued.
The key takeaway is that accounts requiring a password need to be secure, but should also have a backup to enable access in the event of a forgotten password or estate distribution. It’s good practice to establish a plan at the onset of investment activities, because before you know it, a decade of investments will accrue and you may just forget your password when it’s needed most.
Jeff Connely was a Bitcoin miner who died doing what he loved – flying his Cessna in the Alaskan Bush. He was only 26 years old when he passed, and at that time, he owned a sizeable share of Bitcoin. The problem? No one, not even his parents or close friends, knew where he stored it, how much he owned, or how to access it.
The amount he owned would have been a nice influx of money that his loved ones could have managed after his passing. But since he didn’t share the details with his family, the shares he owned, and total amount of funds, went with him in the plane crash. Relatives may be able to estimate your net worth and property assets after your death by sifting through email, bank statements, or physical paperwork at your residence, but this is especially difficult to do with Bitcoin.
It’s not always obvious to loved ones that Bitcoin assets are a serious investment and may be worth an astonishing amount. That’s why a plan needs to be put in place. Let a trustworthy person in your network in on the details of your cryptocurrency activities, and how to access them should the unthinkable happen. Not only that, it’s smart to include details on how you want assets to be used when you’re gone. If you don’t do this, you’re putting your hard-earned investments up to the whims of how much documentation you left behind, and how easily loved ones can access it.
Cryptocurrency is a powerful investment tool that can be leveraged to one’s advantage and build generational wealth. It’s also very new to many of us, so working out a management strategy can be uncharted territory. To be prepared for the unexpected, lean on the knowledge of our estate planning professionals. We can craft a sound cryptocurrency plan to protect you and your loved ones. Whether you’re a seasoned crypto investor, or are considering just diving in, we encourage you to reach out to our advisors to plan for the future.
For the Reno snowbirds out there, the first snow of the season often signals that it’s time to move to a second residence with a warmer climate. While this move may seem innocent enough, there are a few legal matters to consider before locking up the house and heading south. One of the matters in question is which state you consider ‘home’.
Your state of domicile is where your permanent, principal residence is located. It affects family law matters, estate planning, and of course taxes. It is possible to be a resident of multiple states, but you can only call one your state of domicile. There are some subtle differences in state domiciliary laws, but usually, it’s were you live a large portion of the time and return to after going elsewhere.
For those who split time between multiple US states, it’s important to review your tax records with an advisor to ensure you are filing them correctly, and are maximizing use of tax laws. For instance, if you pay taxes in Nevada, you already know you’re among the seven states that do not have personal income tax.
Before heading south, take a look at your estate plan documents. It’s easy to glance over life events that may have happened recently, but they can affect how you want your wishes to be carried out. Keeping your estate plan current is a habit everyone should get into, as it ensures a seamless transition of your legacy. Ask yourself the following questions to help:
You may also need help with transactions and other financial matters while away from your domicile. That’s why it is important to determine whether your financial power of attorney is ‘springing’ or ‘immediate’. A springing financial / medical power of attorney means your agent can only step in and take action when you are no longer able to do so. On the other hand, an immediate financial / medical power of attorney means your agent can act on your behalf right away, even if you are able to take action yourself.
The knowledgeable team at Anderson, Dorn & Rader can help you determine which designation your estate specifies, and aid in performing changes if desired.
As you prepare for your upcoming travel, please do not hesitate to give Anderson, Dorn & Rader a call. We are here to answer any questions and to make sure you are properly protected no matter where you may roam. We are available to meet with you in person or via video conference. To schedule a meeting, call us at (775) 823-WILL (9455) or fill out our contact form. We look forward to meeting you!
Death is a delicate subject, but can be made simpler with proper planning. In the best case scenario, all paperwork and assets associated with a passing loved one is prepared with the utmost detail prior to death, allowing friends and relatives to fondly remember the deceased and take time to grieve.
Anderson, Dorn & Rader, and the estate planning business as a whole, aims to simplify the legal processes surrounding death so legacies can be transferred to surviving loved ones in a fair, stress-free manner. To accomplish this, savvy individuals will often take measures to ensure they don’t burden their surviving relatives with undue complications like the probate process.
Several tools are available through qualified attorneys to keep your property and monetary assets out of probate. Among these, establishing co-ownership of bank accounts and home titles, as well as lining up beneficiaries on investment and insurance accounts are great to start with. But a revocable living trust is one of the most favored comprehensive options that an individual can set up to avoid probate. Let’s check it out:
A trust is a fiduciary arrangement that grants a third party, or trustee, the legal permission to hold and manage assets on behalf of a beneficiary or beneficiaries. A living trust is enacted while an individual is still alive, rather than upon death. Arrangements can be made to grant you oversight duties on your own living trust until you become incapable of soundly managing your assets, or pass away. Upon your incapacitation or passing, the successor trustee assumes responsibility over the assets in the trust and manages them on behalf of all involved beneficiaries.
The Probate process involves transferring ownership of all monetary assets and property that haven’t been assigned to beneficiaries, or don’t contain a pay-on-death or transfer-on-death designation upon your passing. Often times with probate, the court gets involved, and the long-winded process to account for the assets ensues.
With a trust, your assets are ready to be transferred to your beneficiaries upon your death, if they haven’t already been transferred to the trust while you’re still alive. This puts probate out of the question, as your assets are all accounted for and can be distributed in a timely manner.
Even better, trusts can incorporate pretty much any category of asset: from real estate, to stock holdings, to bank accounts, to family heirlooms. This keeps your legacy from being administered through the probate court, ensuring everything you worked for ends up in the hands of the individuals you deem as successors. Not only does this eliminate costly court costs, but it keeps your records out of the public’s eye and enables beneficiaries to remember the deceased and carry on the good fortune of the trust without running into road blocks.
The language and investment surrounding the establishment of a trust can be daunting, often prompting individuals to delay the process or put it off entirely. But to plan without a doubt where your assets will end up, and with whom, it’s vital to create a trust. It’s peace of mind for both you and your loved ones when you pass.
Planning the details around your death is sometimes a difficult topic to breach, but can be made simpler with the help of your family and knowledgeable attorneys like Anderson Dorn & Rader. While you are ultimately at the helm when it comes to important decisions, our estate planning group truly cares about maximizing the legacy you will leave to your loved ones. For any questions about how to start the trust formation process, please give us a call or fill out our contact form. We look forward to bringing you and your family peace of mind.
The days are flying by, and before you know it, the New Year will be here. Plan ahead and fine-tune your gift giving before the holiday chaos ensues. It’s possible to make annual, medical, and educational exclusion gifts that aren’t technically considered as such under federal gift tax law.
Annual exclusion gifts are one type that you can give that do not trigger federal gift tax. For the year 2022, the gift tax threshold is $16,000 per person. That is expected to increase to $17,000 in 2023.
With annual exclusion gifts, assets amounting to $16,000 or less that are given to an individual within the calendar year are not considered gifts (for tax purposes at least – the recipients will still be thankful!).
Hypothetically, that means you can gift assets amounting to $16,000 or less to as many individuals you’d like up to December 31st of this year, then follow that gifting criteria again for the same recipients on January 1st, 2023 without having to file them under federal gift tax law.
Some sources may indicate that married couples are able to effectively double the annual exclusion amount ($32,000 per calendar year). Even if a married couple abides by this threshold, in some cases they may still be required to file a gift tax return. We recommend consulting our estate planning services to see if you need to report these “split gifts”, as they’re referred to.
Qualified medical exclusion payments / gifts are another type of transfer that aren’t considered ‘gifts’ under federal tax law.
To take advantage of medical exclusions, one must make a payment directly to a healthcare institution or medical insurance provider. Generally, this exclusion can be applied to any medical expense qualifying for a deduction under federal income tax guidelines.
For instance, you could have given $20,000 to the hospital that your grandchild was treated in for an emergency procedure earlier in the year, then give the same grandchild up to an additional $16,000 amount before December 31st, 2022. You could even go as far as to gift another $16,000 on January 1st, 2023. Even in this extreme example, these gifts would not trigger the federal gift tax threshold, as long as they are accounted for and transferred with the exclusions in mind.
An important note: the medical exclusion gift / payment must be made directly to the medical institution or medical insurance provider, not the individual receiving the medical care or insurance money. Even if the payment is “earmarked”, the patient cannot touch it, or the federal tax law will kick in and consider it a gift.
Gifted assets that meet the criteria of educational exclusions are another type of transfer that aren’t considered ‘gifts’ under federal tax law. This includes qualifying payments made directly to both domestic and foreign institutions.
So hypothetically, you could pay for your grandchild’s emergency procedure (referenced above), pay for their educational tuition amounting to $25,000, give them an additional $16,000 by December 31st, then give them $16,000 on January 1st, 2023. That’d be one thankful grandchild, and you likely wouldn’t trigger any federal gift tax returns.
Remember two things before initiating an educational exclusion gift: First, the payment must be made directly to the educational institution, not to the individual enrolled. Next, the payment can only be put towards tuition. Not supplies, books, dorm payments, or other related educational expenses.
It can be exciting to gift money and property to loved ones. After all, they will carry on your legacy in the future. While it’s tempting to simply transfer it to the recipient’s bank account, consider the guidelines surrounding annual, medical, and educational exclusion gifts to avoid the burden of taxes and maximize your financial picture. For assistance in doing so, contact the experienced Reno estate planning attorneys at Anderson, Dorn & Rader. We are happy to walk you through the process to make it enjoyable for all parties involved.
If you are the executor (personal representative) of a will, or the designated trustee of their trust passes away, it’s your legal duty to act in the best interests and distribute the assets to the beneficiaries of the trust according to the terms laid out by the benefactor.
*The roles of executor and trustee can be listed under the umbrella term: fiduciary, so we’ll refer to both as such throughout the blog. There are various reasons why you, the fiduciary may not be able to locate a beneficiary of the will or trust. Maybe you lost touch, or perhaps you had a falling out. What should you do in this situation?
When you were bestowed with a fiduciary role, it became your legal obligation to use reasonable diligence in attempting to locate the missing beneficiary. The definition of “reasonable” can depend on individual scenarios like the monetary value of the assets, and what actions have been made in attempting to contact the missing beneficiary.
To start, you as the fiduciary should call the missing beneficiary’s last known phone number, then send a notice that the estate / trust is being administered to their latest address on file. If you get no response from these initial touch points, try contacting their family members and friends for any information they may have on their whereabouts. Social media can also be a powerful tool, as well as people-locating sites on the internet. It also can’t hurt to conduct a property search via government websites, which often show official home records like deeds.
If the assets being distributed are not monetarily significant, you as the fiduciary won’t be required to shell out copious amounts of the trust’s money to try and locate the missing beneficiary. On the other hand, if the assets are of a significant amount, you may have to take further actions to attempt to locate the absent beneficiary to meet the threshold for ‘reasonable diligence’. These can include hiring a P.I. (private investigator) or utilizing an heir search specialist.
Believe it or not, there’s are services dedicated to finding missing beneficiaries. By utilizing estate investigators and genealogists, heir search specialists are able to comb through vast swathes of the country – and worldwide – to find potential heirs. They do so thanks to access to records like birth, death, marriage, and adoption records.
Heir search specialists do cost money, but can provide peace of mind that the person receiving distributions from the trust is, in fact, who they say they are. Unfortunately, there are instances where people pretend to be estranged heirs, so it’s important to confirm identities before any money from the trust is handed over.
If your efforts in hiring a search specialist still don’t turn up the beneficiary you’re looking for, it’s possible to petition the court asking permission to distribute a preliminary amount of property and money to the beneficiaries who have been successfully located. It’s likely that the court will order that the assets be held in the trust for a period of time (this varies by state) so the missing beneficiary has a reasonable amount of time to come forth and claim it. Another option is to obtain indemnity insurance, which covers you in the scenario where a previously un-located beneficiary appears and asks for their portion of the trust after it’s been distributed.
Tracking down an estranged beneficiary can take significant resources and lead to a prolonged asset distribution process. Additionally, the beneficiaries already located can often become impatient while time lapses. For these matters, it can benefit you to hire a legal professional with experience handling the known beneficiaries’ demands while still abiding by state regulations and protecting the trust’s best interests.
In the event where a beneficiary cannot be located, even after your due diligence efforts, it’s best to have a legal professional’s guidance when petitioning the court for a preliminary asset distribution to known beneficiaries. It saves time, and ensures legal compliance.
Becoming a fiduciary of a will or trust is an honor that comes with large responsibilities including carrying out the wishes of the deceased. Thankfully, you do not have to navigate challenging situations alone. By leaning on the extensive experience of the attorneys at Anderson, Dorn & Rader, your unique circumstances can be handled to provide a positive outcome for all parties involved. When you need estate administration assistance, our team will be ready. Contact Anderson, Dorn & Rader, and we’ll ensure your role as the fiduciary is maximized while honoring loved ones in the process.
Trust laws exist not only to safeguard the trust and trustor, but to also set guidelines for trustees to abide by. A trustee has a duty under the law to communicate with beneficiaries and inform them of progress or changes in the trust administration. Some duties of the trustee include giving beneficiaries a copy of trust documents, providing information and timelines of the trust administration, and preparing an annual accounting synopsis of the trust’s income and expenses.
It’s not uncommon for trustees to leave beneficiaries in the dark regarding new trust information. Some trustees are unaware of their duties under the law and believe they can do what they please with the trust. However, this is typically not the case, and if your trustee is unresponsive to your requests for information, you have every right to seek further action. Below are some things for you to consider when wondering how to handle an unresponsive trustee.
How do you try to contact your trustee? Is it through email? Do you try to call? Have you sent a letter through the mail? It could be very possible that your trustee simply isn’t checking in on all of their inboxes all the time. A trustee who simply doesn’t check their email regularly may respond quicker to a phone call or text message. If you’re not getting response through phone or texts, you could try sending them a formal letter.
You should also consider the relationship you and the trustee have with each other. If communication typically escalates into hostility between you two, it’s possible that the trustee may be avoiding you on purpose, even though this goes against their duties to keep all beneficiaries informed. If you cannot speak civilly in person or over the phone, it’s important that you keep all communication in writing. Just be sure to ask your questions very clearly and request information without accusations. If this still doesn’t work and your trustee remains unresponsive, it may be time to seek legal assistance.
An attorney may be involved in trust communication between beneficiaries and trustees in one of two ways. Most trustees have attorneys who represent them. If you’re having a hard time getting a hold of the trustee, try contacting their lawyer instead. If a trustee is oblivious to their duties under law, an attorney can ensure they are made aware of their responsibilities and encourage the trustee to comply. Some trustees may not want to directly communicate with beneficiaries of the trust, in which case their attorney may be the direct point of contact. To get information via a trustee’s attorney, be sure to follow up your initial call or text with the requests you wish to receive and any attempts you have made to contact the trustee.
If you feel a lack of proper representation in a situation like this, you may also seek out your own attorney. They’ll be able to clearly identify your rights as a beneficiary, and will give you the backup you need to enforce them. It’s always a good idea to have an objective intermediary that can assist in getting you the information you are rightfully entitled to.
If you and your attorney are still being met with no response, then your last option is to file a petition with your local court. Before you do this though, you should confirm that your attorney is familiar with trust laws and administration. This can make or break your petition’s success. If the trustee fails to respond to the petition, the court can then remove the trustee from the trust. This might also make the trustee liable for any losses or damages the beneficiaries experienced as a result of their lack of communication and ability to perform their duties. A court petition gives additional resources like subpoenas, depositions, and requests for documents to help you get the information you’re seeking. This should be used as the last method for handling an unresponsive trustee, as it can be costly and emotionally messy.
Trustees can conjure various reasons for being unresponsive, but they are legally obligated to communicate with and provide beneficiaries with certain information regarding the trust. Before you go filing a petition right away, try another method of contacting the trustee. If a phone call isn’t working, try an email or maybe send a letter instead. If this still doesn’t garner any results, involve an attorney. They will help get the ball rolling and will likely encourage the trustee to come forward with their information. Only as a last result should a petition be filed with your local court.
If you have any questions regarding how to contact an unresponsive trustee, be sure to reach out to the reliable and experienced trust attorneys at Anderson, Dorn & Rader. We’re happy to help you get the information from the trust administration that you are entitled to, and are dedicated to providing the highest quality estate planning resources available.
You’re probably familiar with federal taxes, especially if you see the line item deduction on your check each pay period corresponding to ‘federal income tax’. Fewer people are aware of other types of taxes though, such as capital gains taxes, gift taxes, estate taxes, and perhaps the most overlooked: the generation-skipping transfer tax.
The federal generation-skipping transfer tax (GST) comes into effect when an individual transfers property to another individual at least two generations down from them. These transfers usually involve gifts given from grandparents to grandchildren and/or their descendants. However, the GST tax can also be triggered by gifts given to unrelated individuals (not including the individual’s spouse).
The GST tax is effective for gifts transferred both during the grandparents’ lifetimes and after their death through an inheritance. The recipients of gifts that trigger the GST tax are commonly referred to as “skip persons”.
The GST was first introduced by Congress in 1976 to eliminate the ability for wealthy people to skip over their children and transfer assets directly to grandchildren, thus avoiding inheritance taxes completely, and estate taxes for the first generation. The GST abides by the gift and estate tax exemption limits, but is a separate tax in itself that applies in correspondence and in addition to any present gift and estate taxes.
Typically, the GST tax comes into effect when the amount transferred to “skip persons” is greater than $12.06 million (a transferor’s lifetime GST tax exemption amount allotted for 2022). The lifetime exemption amount consists of all gifts made throughout the transferor’s lifetime, as well as transfers made at death in the form of wills or trusts.
For instance, if a grandparent gifts $50,000 to each of their 6 grandchildren in 2022, then $300,000 is counted against their lifetime exemption allotment of $12.06 million. If this gift amount is exceeded (both during life & death), a flat 40 percent tax is applied to the overage.
If the child of a grandparent passes away before them, there is an exception to the GST tax. In the case that assets are transferred to a grandchild whose parent has already passed away, the GST tax is not applied. This would not be considered generation skipping, since the grandchild essentially assumes the position of the parent who passed away, facilitating an adjacent generation transfer.
The GST tax also doesn’t apply to medical care or tuition payments transferred directly to a designated institution. In this case, a grandparent could financially assist with a grandchild’s college tuition or medical bills if they give the money directly to the college or hospital.
The vast majority of us do not have to worry about the GST tax structure due to the high lifetime transfer amount of $12.06 million. Even so, it’s smart to be aware of the GST tax, and that the lifetime transfer amount is set to be adjusted to $5 million (to account for inflation) in the year 2026.
Proposals to lower the exemption amount are regularly introduced to Congress. That means the GST tax lifetime amount could change at a moment’s notice. Knowledge of the GST tax is vital if you or a loved one plans to transfer assets to grandchildren.
Additionally, one should keep in mind that, although married couples are essentially granted double the exemption amount, the exemption rules to the GST tax are ‘use or lose it’. It does not work in the same way as the estate tax, where a spouse who passes away can have their unused amount distributed to the surviving spouse. Any unused GST tax lifetime exemption amount evaporates at the time of the first spouse’s death.
This is not an exhaustive explanation of the generation-skipping transfer tax, and you will likely have questions based on your unique situation. The GST is a challenging subject, and few have the experience navigating the laws surrounding it than Anderson, Dorn, & Rader. Our team can assist with any questions if you plan to transfer a property amount sufficient to trigger the GST tax. The best outcome is one that satisfies your desire to pass wealth down to the next generation, so when you’d like to start the conversation on transferring your assets, contact Anderson, Dorn, & Rader: Reno’s trusted estate-planning team.
According to recent, prominent studies, nearly two thirds of American adults do not have a formal estate plan set up.
For those in the minority who have prepared a living trust, will, or other estate documents, you’re one step ahead. However, just because you’ve established these initial steps doesn’t necessarily mean your estate plan is settled. A thorough estate plan requires continual updating as circumstances change. Even if you have been good about making updates, there are crucial components you may have overlooked. Designating beneficiaries and decision makers for retirement accounts or life insurance policies are a prime example.
Your designated beneficiaries and decision makers are living people, so it’s important to consider what may also happen to them. Even the most well thought out plans can go awry, but proper consideration of all potential scenarios can play a large role in ensuring your wishes stay intact after you’re gone.
Short answer: Yes. A proper estate plan lines up multiple decision makers to carry out your wishes.
You should put careful thought into determining which individuals to appoint as decision makers. They’ll need to be trusted, as important decisions regarding your affairs will come their way. It’s also possible that at some point, they will no longer have the capacity or willingness to carry out the decisions asked of them. This is where backup individuals are important. We recommend having at least two backups for each of the above positions.
People, and your perception of them, can change over time. Some of these changes will impact their capacity to fulfill your last wishes. For instance, the person you initially designate as trustee might turn out to lack knowledge of finances. This raises a red flag, because they’ll be the one handling your money after you’re gone. And if your designated guardian turns out to be not so great with children, you’d want to reconsider who you appoint to take care of your kids.
There doesn’t need to be any suspicious behavior to influence a decision maker change. Often times, something as predictable as age plays a factor. Somebody who you designated as a guardian when they were in their 40’s may not be as fit for the position in their 60’s. On the same token, someone too young to appoint as a guardian now may be ideal in ten or so years.
A backup decision-maker is also necessary to replace one that dies, becomes disabled, or expresses that they no longer wish to take on the responsibility of a designated position.
The main thing you should takeaway is to continually check in on your choices for designated decision makers and name backups when necessary. Alternatives act as a fail-safe to ensure that people you love and trust – not the courts – end up making decisions on your behalf after you’re gone.
Your furry, feathered, and even scaled friends are part of your family. Often, they require more day-to-day attention and care than children. So who will take care of them when you’re no longer around?
Pets are certainly not overlooked in your daily life. Some sleep on the bed, eat like royalty, and get groomed handsomely. But it’s possible that your pets weren’t given much thought in the midst of planning your estate with an attorney. After all, there’s a lot on your mind during the process.
Believe it or not, you can name a legal guardian for your pets after you’re gone. Similar to other designated positions, it’s helpful to have backups lined up if your first guardian choice doesn’t work out. Additionally, you can include information on how they can find a suitable home or shelter to be surrendered to in the case that no one can care for your pet. Aside from addressing who the caretaker will be, it’s beneficial to write out your wishes for how your pet should be cared for. This way, the designated guardian will know all of the animal’s quirks, medications, allergies, and their favorite spot to be rubbed.
A named beneficiary is the individual within your estate plan who will inherit your monetary and property assets when you die. When you pass and your estate is administered, your assets are distributed or managed by your designated beneficiaries. Some instances require a contingent (backup) beneficiary.
If you do not have a contingent beneficiary in these scenarios, your assets may be dealt with according to state law. This often involves enacting the probate process. This lengthy process can delay asset distribution, lead to increased settling costs, and cause family infighting. To avoid these unfavorable outcomes, it’s best to designate one or more contingent beneficiaries for the benefit of everyone.
It’s not fun to think about, but you should be prepared for the unthinkable situation where all the loved ones you designate as beneficiaries pass away before you.
Yes, it’s highly unlikely, but it’s happened before. In this case, having contingent beneficiaries will not suffice because nobody will legally be able to accept the assets in your estate. Depending on your state of residence, if you have no surviving beneficiaries, the government could obtain all your money and property by default.
Even though it’s uncommon, this scenario could afflict those with few living relatives. By adding a family disaster plan or remote contingent beneficiary to your estate documentation, you are able to designate a charity or organization that will receive your assets.
Unexpected life events can often prompt people to take action on their estate plan. At the very least, one should have a basic will, but many people still put off accounting for their assets once they’re gone. Procrastination, a perceived lack of money and property, and concern for the cost and energy required to implement an estate plan can turn some away from the process.
The estate planning process is not as costly or intensive as you may think, especially when hiring a knowledgeable estate sale lawyer. And considering the cost of NOT having an estate plan, it would be selfish to leave your surviving family with the burden. Not to mention, your hard-earned assets could end up in the government’s hands if not prepared adequately. For those who have already taken steps to secure their estate plan, this is a great start. With effective back-ups to weather the unexpected, your life plan will be able to determine who will make decisions, take care of your pets, and inherit your assets after you have deceased.
No matter where you are in the estate planning process, we encourage you to reach out to our real estate lawyers to ensure that everything you worked for in your life goes to the people you love and trust. Contact Anderson, Dorn, and Rader to begin your journey to peace of mind for you and your family’s future.
In general, the answer is yes; your trust can own your business after you die. But taking a deeper look into this matter, some factors may affect your individual situation. Both the type of business you own (LLC, Partnership, corporation, sole proprietorship), as well as how your business is currently managed can determine how the trust obtains ownership and continues operations after you pass. We’ll explore these determining factors here:
Once the trust has obtained ownership of your business, there are factors that affect how it will be managed after you are gone. The first factor is the type of business that has been transferred (which we explored above). The other is the way the business was managed prior to the transfer of ownership.
As is the theme with trust transfers, the terms will determine whether income is distributed to beneficiaries. The trust is entitled to receive income or distribute profit distributions to owners or stockholders.
In the case that your business is taxed as an S corporation, there are unique circumstances under which someone can own the S corporation after your death. Prior to transferring ownershipof trust assets, consult a qualified attorney or financial professional.
As discussed, there are many factors to consider and navigate when transferring business ownership before you die. Overall, it depends heavily on the type of business you are operating, as well as how it is currently being managed. Therefore, it’s a great idea to consult with professionals to properly consider every factor and complete the transfer of ownership with confidence. It can be daunting, but Anderson, Dorn & Rader is here to help!
Contact Anderson, Dorn & Rader, the trusted team of Nevada Wealth Counselors, to properly transfer ownership of your business before you pass.
Generational wealth is often the means by which families retain economic status and live comfortably over time. Family members before you worked throughout their lives to make a living, care for their assets, and pass some of that down to the next generation: you. In the event that you are expecting an inheritance, do you have the proper measures in place to confidently acquire and manage it?
Estate planning plays an integral roll in maximizing an expected inheritance by laying out how it will be used by your family in the future. Expert research analyses predict that the largest transfer of wealth in history will occur over the next several decades. However, with an uncertain economic climate and a trend towards spending over saving, heirs of inheritances often spend, lose, or donate large portions of what they receive. Planning for inherited wealth can help you anticipate and prepare for these instances, while sill protecting the legacy left to you. With an expertly-crafted inheritance plan, you are helping to ensure financial security for you and your family.
Sometimes, our emotions guide our financial decisions, rather than logic. The feelings surrounding the transfer of an inheritance are often unsettling – grief, guilt, anger, confusion. It’s difficult to consider the facts and hard numbers associated with the passing of a loved one. Not to mention, there are lengthy procedures one has to go through to legally confirm the transfer of wealth. It’s important to stay level-headed during the decisions that could affect you and your family’s financial well-being.
An inheritance can be an unexpected stroke of good fortune in a time of loss. Since our brains often classify them as “found” money rather than “earned” money, inheritances don’t tend to be utilized as conservatively as the money we work for. That’s why most inheritances are drained within just five years. A failure to realize the implications of careless spending can get us accustomed to living a lifestyle above our means, only to have it disappear as quickly as it came.
A sudden acquisition of assets and cash can greatly affect you and your family’s life. When handled correctly, you’ll respect the legacy of your loved ones that came before you. When caught unprepared though, you could be burdened by tax payments, careless spending repercussions, and even creditor issues.
Before any pen & paper planning begins, it’s best to have a conversation with your loved ones while they are still living and mentally fit. It can be awkward to talk about what happens to assets after one passes, but go in with the frame of mind that each party will be helping each other. The benefactor will be giving you vital information and consent, and you will be giving them peace of mind that their legacy will live on. By discussing their hopes of how the inheritance will be used after they pass, you’ll get a better understanding which you can use in the planning process.
Using the conversations with loved ones as your guide, it’s crucial to then meet with a financial planner and an estate planning attorney to discuss the amount and types of assets you anticipate inheriting. There are nuances to the processes in which you’ll handle various types of assets. For example, inherited real estate is handled much differently than inherited stocks and bonds. An estate planning attorney can also help you understand the distribution schedule to receive the assets. It could be all at once, in installments, or custom-configured based on a will. Not to mention, a financial planner can help you navigate the taxes associated with your inheritance.
Life happens, and a legacy left to you by a loved one can alter the vision of your financial picture. Anderson, Dorn, & Rader are your trusted team of estate planning lawyers and financial planners in Reno.
If your family is expecting an inheritance, wants to update estate plans, or has questions about the planning process, give our office a call so we can help you maximize your windfall and honor the loved ones that worked hard to pass on their good fortune to you.
Estate plans are more than your monetary net worth. Categories of your estate can include real estate, pets, possessions and all other property you own. Some people forget how priceless personal property, such as family heirlooms and keepsakes, can be to those you leave behind.
It is important to work out what will happen to these valuable items after your death by creating an estate plan.
Heirlooms have been passed down to family members for generations. These items can vary in monetary value, but the memories attached to them are copious, giving them an emotional and sentimental value that shouldn’t be discarded or auctioned after your passing.
Keepsakes are slightly different from heirlooms because they apply to specific items you owned during your life. These items can be anything from cutlery sets, furniture, or jewelry that you left behind for your family. While these valuable items only have been passed down once, they have nostalgia your family wouldn’t want to lose.
Family members can have different values associated with certain heirlooms and keepsakes. It can be crucial to talk with each family member about their feelings and expectations towards certain items in advance. This common knowledge will help your family avoid unnecessary fighting for heirlooms or keepsakes after your death.
It is a good idea to decide if you need to have your family heirlooms or keepsakes appraised. By doing this, you provide your heirs with the necessary documentation to understand the value of each object passed down to them. Plus, you might realize you want to get some of these items insured due to their worth. Handling this before you pass will make it easier for your heirs to go through the mourning process and avoid unnecessary externalities.
There is no proper way to distribute these valuable and irreplaceable items after your death. Of course, these valuables could end up lost or undervalued if they end up in the wrong hands when there is no plan in place for family heirlooms and keepsakes.
Here are some ways to distribute these precious items to your heirs.
Some people prefer to equally distribute heirlooms and keepsakes to their heirs by focusing on each items' monetary value. An estates planning attorney can offer you guidance when understanding the liquidity of each family heirloom and keepsake.
It is important to note more than two of your heirs may desire the same heirloom or keepsake. You can resolve this dilemma before you pass by creating a personal property memorandum. This document is a chance for you to explicitly state your wishes and avoid any conflict that may come after your death.
One benefit to this type of inheritance planning is that a property personal memorandum is referred to as your last will and identifies who is to receive said property. Also, you don't need to execute a new will or amend your trust if you decide to make modifications to which heirs receive these family heirlooms and keepsakes.
You may prefer to gift special items to your heirs before passing away. Doing this could be a consideration if you find enjoyment in seeing how your family reacts to receiving their heirloom or keepsake.
Of course, you don't want to forget the gift tax you may incur after giving any items to your heirs while alive. Furthermore, you may want to consider if you should factor them into what share of your estate your heirs receive after your death depending on their value.
Anderson Dorn and Rader’s attorneys have the expertise and knowledge to help you create an estate plan that considers all your assets. Family heirlooms and keepsakes are just one piece of the puzzle. Define all your wishes for what your heirs receive with an estate plan to help avoid conflict between your heirs later on.
Many Northern Nevadans know the dangers that come along with this time of year. A 2019 statistic showed that 17% of all accidents happen during winter conditions, highlighting an increased chance for individuals to experience an accident due to extreme weather changes. Ultimately, no matter how long you’ve lived in the region, less sunlight, alongside rain, snow, and black ice creates challenges for anyone driving on the road. While no one ever thinks they will fall victim to an accident, knowing what to do after a fender bender is crucial to ensuring a headache-free experience.
Following these guidelines can help you document the incident calmly and efficiently.
While many people believe there is no reason to immediately report minor accidents, following these steps avoids unnecessary complications and significant penalties down the road.
If an accident occurs making you unable to speak or communicate decisions clearly, you will need to have someone talk to medical professionals on your behalf. This should be a previously planned and trusted individual who would be deemed your medical power of attorney. This person will arrange treatment with doctors until you regain consciousness, so it's crucial you've assigned this power to someone. Your medical power of attorney will expedite medical treatment in the case of an emergency. Furthermore, your medical power of attorney should know where to obtain a copy of this documentation to help expedite treatment.
Opting for minimum coverage can be detrimental to your savings and property in the event of a serious lawsuit. You and your car must be fully covered to prevent this from happening. Plus, you should speak to your insurance broker to find out if umbrella insurance makes sense for you. Umbrella insurance is a low-cost way to gain extra liability coverage and protect yourself from damages that may exceed the limits of your car insurance. Umbrella insurance ensures you have access to a bigger pool of money in the event of a car crash lawsuit against you, protecting your savings and future prosperity.
After a car accident with significant property damages and medical injuries, it may feel necessary to protect your assets from excessive lawsuit demands. You may attempt to do this by transferring funds to friends and family, but be careful because this is against the law in some states. These transfers used to protect assets won’t be ignored by the courts. If considered fraudulent, court judges have the full right and power to reverse transfers. This means that these assets can be obtained by the party in the event of a successful lawsuit against you even after being gifted to a friend or family member.
Revocable trusts are used to protect your assets and trust from creditors and lawsuits after your death. Unfortunately, while some people believe that these trusts protect their assets during their life, this is a misconception and not their design. These trusts fail to completely protect your assets because you have complete control of all assets placed in a revocable trust. Your ability to control these trusts means a judge can order you to revoke the trust to pay creditors and lawsuit judgments.
However, with the guidance of an experienced asset protection and estate planning attorney, you can use properly designed strategies to enhance protection for your assets and property. That means taking the time to sit down with an experienced attorney well before an accident occurs offers you the best chance to maximize asset protection for your estates.
SPEAK WITH AN ESTATE PLANNING ATTORNEY
Contact us today to see how AD&R can provide you with the finest legacy and wealth planning advice Northern Nevada has to offer. We help get you the proper insurance and design estate planning to help you overcome unexpected lawsuits after an accident. Give us a call today so that we can help prepare you for the perils winter might bring.
To date, twenty-four states have enacted or introduced model legislation referred to as the Uniform Voidable Transactions Act (Formerly Uniform Fraudulent Transfer Act). The full text is available on the website of the Uniform Law Commission at https://www.uniformlaws.org/committees/community-home?CommunityKey=64ee1ccc-a3ae-4a5e-a18f-a5ba8206bf49.
When we think of estate planning, we often think about preparing our accounts and property to go to our loved ones in a tax-efficient way, protected from probate, disgruntled heirs, beneficiaries’ creditors, divorcing spouses, bankruptcy, and the poor spending habits of children or other beneficiaries. We rarely consider preparing for receiving an inheritance of our own.
Believe it or not, there are some essential things you must consider when you anticipate receiving an inheritance. Understanding these issues can be crucial to protect that inheritance from unnecessary taxes and outside threats like creditors, divorcing spouses, and bankruptcy.
The first way to properly prepare to receive an inheritance is to discover what you will be inheriting. Is it real estate, a 401(k), or an individual retirement account (IRA)? Perhaps it is publicly traded stock, an interest in a family business, or just simply cash from a savings account or life insurance policy.
Whatever it is, there are steps you can take today to plan to receive and manage it properly. For example, if you will receive a large IRA account from a parent, do you understand the new rules associated with inherited IRAs as implemented by the SECURE Act passed in late 2019? If not, you should educate yourself now on how to maximize the tax benefits available under the law regarding required distributions. Without an understanding of these often complicated rules, you could make an irreversible mistake and withdraw all of the IRA funds at one time, thereby substantially increasing your tax liability in the year of withdrawal. There are a variety of nuances to these rules that a tax adviser or attorney can help you understand and navigate properly.
Likewise, if you are receiving rental property as a part of your inheritance, you should consider the business of being a landlord and if you even have an interest in continuing to operate such a venture. If not, you may want to prepare to find a buyer for the property who can offer you a fair price as soon as possible. Or, at the very least, look into hiring a property management company to take over as soon as you inherit the property.
If your loved one has completed trust planning that includes establishing an irrevocable trust for you, such trusts frequently include important features that are generally referred to as powers of appointment. A power of appointment in a trust is a right, often given to the beneficiary of the trust, to gift trust property to someone else or, in some cases, to yourself. These powers are often limited to making gifts to only certain classes of people (such as the descendants of the trust makers), or they may be limited to making gifts only at death (a testamentary power of appointment) or during life (a lifetime power of appointment). Some trusts include both types of powers. These can be powerful planning tools that have been given to you through trust documents. Failure to recognize the existence of these powers can lead to unintended consequences, or at the very least, crucial missed asset protection and tax-planning opportunities.
If you know that you have been granted a power of appointment, you should attempt to obtain a copy of the relevant trust documents to carefully review and determine the nature of these powers. An experienced estate planning attorney can help you with this task. With this information, your professional advisers can properly advise you on the planning opportunities and tax consequences of the powers of appointment that may be available to you.
A common mistake made by married individuals who receive an inheritance is to commingle that inheritance with the property of both spouses. How can this be a mistake? An example may best illustrate the point:
Imagine Robin receives a cash inheritance from her deceased father of $300,000 and she and her spouse Morgan decide to use the inheritance to buy a vacation cabin in the mountains. When purchasing the property, the title company assumes that because they are a married couple, they want to take title to the property as joint tenants with rights of survivorship and the deed gets prepared and recorded accordingly. Further imagine that over the years, they furnish the property together, maintain it, and enjoy many family vacations there. One night, however, Morgan has a little too much to drink at a bar, gets behind the wheel, and causes a deadly accident that results not just in a DUI, but also in a wrongful death lawsuit. Because Morgan’s name is on the title to the property as a joint owner, Robin and Morgan discover that the family cabin is an asset that can be used to satisfy the lawsuit judgment against Morgan. As a result, they are forced to sell the cabin and use half of the proceeds to satisfy the judgment.
This unfortunate circumstance can be the result of Robin’s failure to keep her inheritance as separate property. By commingling her property with Morgan, she made it much easier for the judgment creditor in the lawsuit to reach what otherwise would have been considered Robin’s separate inheritance property.
Commingling inherited property can also lead to a similar result if Robin and Morgan ultimately divorce and the family court judge has to determine how to divide the marital property. Failing to keep the inherited property separate during marriage can often lead to that property being divided between spouses at divorce.
A fourth way for you to prepare to inherit property is by using an inheritor's trust. This is a special type of trust that can be established by the individual who will be leaving an inheritance to you. An inheritor's trust is designed to receive the inheritance that you would otherwise receive directly. It must be carefully designed and implemented to work properly, and an experienced estate planning attorney should most certainly be used in the effort. A properly drafted inheritor's trust includes the following key elements:
An inheritor's trust includes the following benefits:
An inheritor's trust can be a powerful tool to use when you anticipate receiving a large inheritance and would like to make sure that the inheritance is protected from certain tax consequences or threats from creditors.
If you would like to learn more about any of these concepts, give us a call. We would love to discuss these ideas in greater depth with you so we can help you build and protect your wealth more effectively.
