Prepare to be amazed! May is not just any ordinary month - it's National Home Remodeling Month, the time of year when the National Association of Home Builders officially recognizes the tremendous value of home improvement projects. Springtime comes with spring cleanings and home improvement projects, but can also be a good time to consider updating your estate planning documents.

If you need to make small updates to your estate planning documents, such as changing the names of beneficiaries or decision makers, you may wonder whether you can take care of these changes on your own or if you should seek the assistance of a professional. Here are some things to consider before choosing which option is best for you:

If Your Name Changes
If you've changed your name due to marriage and/or your own personal preference, and your estate planning documents don't need to be changed, you may only need to keep copies of any legal paperwork reflecting the name change. Keep copies of these documents together with your estate planning documents. If you've remarried and want to change your name in your estate planning information, or if a trust you established has your old name in the title, it's best to consult an industry professional, such as an attorney, to ensure that the name change is properly handled.

If a Beneficiary’s Name Changes
Wondering what you should do if your beneficiary's name changes? Whether it is due to marriage and/or personal preference, staying on top of this information can save you from running into issues later down the road. While updating your estate planning documents is not necessarily critical, it may be necessary for your beneficiary to prove their identity with a court order, marriage certificate, or birth certificate. It is important to avoid making changes directly on your estate planning documents, such as crossing out a name and writing in a new one. This has resulted in confusion and has even prompted litigation in the past. Courts have had to weigh in on these types of edits to estate planning documents to determine their validity and intent. Even though it may seem harmless, unforeseen consequences can often arise when attempting to edit legal documents yourself.

Adding or Removing a Beneficiary
When events occur such as the birth of a child or the passing of a beneficiary, you may wonder if you need to update your estate planning documents. The answer is that it depends on the language in your documents. Some estate planning documents are drafted to anticipate future additions or removals of beneficiaries by name. It is highly important to seek legal advice before making any changes to your estate planning documents, as serious legal consequences can result from attempting to do so on your own.

Making changes without legal advice could result in unintentionally cutting off people from receiving an inheritance or having your property go to those who never intended to benefit. For instance, adding a spouse’s name to the list of children in your estate planning documents could lead to unintended consequences if the spouse remarries after the child’s death. The former in-law could become a beneficiary of the family trust and have certain rights regarding the trust’s administration, including the right to demand a copy of the trust documents and any financial accountancy. Once that share is paid out, the former in-law might use it in a way that it was not originally intended for, causing negative consequences from an innocent and well-meaning attempt to provide for an in-law.

Appointing New Trusted Decision Makers
In some cases, you may want to appoint new individuals to make important decisions about your property if you become incapacitated or pass away. However, it’s important to understand that certain legal documents cannot be amended easily. While it may be tempting to simply cross off the names of the people you want to remove and add new preferred decision-makers, this can actually void the document under certain circumstances.

If you need to make such important changes, it’s best to have the documents redrafted and executed with the same formalities used in the original documents, ensuring that you follow the applicable state law. For instance, your state may require multiple unrelated witnesses to the signing of a modified will, even if the change you’re making is a one-sentence amendment. The same is true for a codicil, which is an amendment to your will. Other legal documents, such as a power of attorney, a trust amendment, or restatement, may also require similar formalities, such as having your signature notarized.

Modifying Distribution Provisions
There may be times when you consider altering the distribution provisions of your will or trust by changing the percentage/fraction shares of your estate. It is important to note that this modification should be avoided when attempting to make such changes on your own. It is always advisable to consult an attorney if you wish to modify the distribution provisions of your will or trust. You must consider this amendment very carefully and execute it with strict documentation. Such a change to your estate planning documents carries the risk that a beneficiary who receives less under the amendment may challenge it and use any argument available to invalidate the changes. An experienced estate planning attorney will know the necessary steps to take to ensure that your legal documents will be honored by your beneficiaries and the courts after you pass away.

As you have seen, remodeling your estate plan without the help of a trained and experienced attorney can lead to many potential issues. When handled properly, these changes don’t have to be expensive. Your attorney can quickly and inexpensively fix some of these small issues by drafting an amendment to your estate planning documents. Other changes may require more work because the issues are considerably more complex than you first realized. In either case, with a legal professional guiding you through the process, you can be confident that you will not be leaving your loved ones with a legal mess to sort out after you are gone.

If you are uncertain about whether you need an attorney to help you modify your estate plan, we encourage you to contact us. We are happy to consult with you and help you determine what changes, if any, you may need to make.

This is the first week of May, which means that it is also Teacher Appreciation Week and we want to celebrate teachers everywhere and express our gratitude. Your commitment to laying the groundwork for tomorrow's leaders is truly inspiring. We believe that everyone deserves a successful future, including you. We want to ensure that you have all of the essential estate planning documents to secure that future. To get that preparation started, we have some frequently asked questions listed about estate planning and how important it is to have a plan in place.

 

a teacher doing some inheritance planning

What Does the Term 'Estate' Mean?

Having a proper legal plan is important for everyone, regardless of wealth. The term 'estate' refers to all of your possessions, such as bank accounts, real estate, household items, and vehicles. Essentially, it encompasses everything that you own. Once you pass away, everything in your estate is bequeathed to someone else.

 

What Does Estate Planning Entail?

Estate planning or asset protection planning, involves creating a comprehensive set of instructions for your trusted decision-makers to follow. These instructions are laid out in a series of legal documents that specify what should happen to your assets, finances, and other possessions after you pass away. In addition to distributing your estate, these documents can allow you to nominate a guardian for your minor children, and provide guidance for situations where you are unable to make your own decisions or require end-of-life care. A large number of people choose to work with an estate attorney, like us, to help them with this inheritance planning process.

 

Do I Really Need to Plan for Retirement?

Planning for retirement is essential to ensure that you are financially prepared for your post-work years. Your retirement plan options will vary depending on the school district you're in, so you may need to conduct a little research to see the basic features of your plan. Defined-benefit plans guarantee a specific payment amount, while defined contribution plans are based on investment results. To understand your plan's rules and requirements, consider the following questions:

The type of account your retirement plan is in decides the regulations that go with it. Understanding the terms and conditions for your specific plan is vital.

 

What Documents Make Up an Estate Plan?

To create an effective estate plan, you must identify the documents that make up your plan. Having a will or trust already completed means that you are off to a good start. If you haven't started preparing any of the necessary documents yet though, there is no need to panic as we are here to help you create your comprehensive plan for any situation. As a teacher, you know the importance of having a well-organized plan, and we view your inheritance planning documents as the lesson plans that guide and protect your loved ones.

Revocable Living Trust

One part of asset protection planning can be developing a revocable living trust (RLT), which is a trust that you establish during your lifetime, which can be altered at any time until you become incapacitated or pass away. You can either transfer ownership of your accounts and property from yourself as an individual to yourself as the trustee of the trust or name the trust as the beneficiary of your accounts and property (with some exceptions). Although many may believe it, there is no requirement as to how much money and property you need to experience the benefits of a trust. The next step may involve figuring out how to choose a trustee as an RLT allows you to designate a co-trustee or substitute trustee if you become unable to act as trustee for any reason. An RLT also enables you to enjoy your money and property during your lifetime and to designate what will happen to it upon your death, safeguarding it for your chosen beneficiaries.

An RLT is an excellent way to provide instructions to your loved ones about how to handle the money and property owned by the trust. You can specify in the trust document how the money and property should be used during your incapacity and after your death. As an educator, an RLT offers an opportunity to provide younger beneficiaries with teachable moments. You can structure the trust to allocate a specified percentage to your loved one upon reaching a particular age (e.g., one-third at age thirty, one-half at age forty, and the remainder at age fifty). Alternatively, you can use an incentive trust to allow the trustee to give your loved one money only after achieving specific objectives (e.g., successfully completing a post-secondary education, being employed by the same employer for more than a year, being sober for one year, etc.). You can also use your trust to encourage charitable giving by allowing your loved one to select a charity to give a stated amount of money to, providing funding for a mission trip, etc.

Last Will and Testament

Another option for asset protection planning is a Last Will and Testament, which is another option for individuals to carry out their wishes. This document is also referred to as a will. In it, you can name an executor or personal representative who will collect all of your accounts and property, pay off your outstanding debts, and distribute your assets to those you have named. You can also name a guardian for any minor children. Unlike an RLT, this document is only effective after your death and cannot be used during your incapacity. However, it does provide a way to officially express your wishes.

If you choose to distribute your assets through a will, your family will have to go through the probate process, a court-supervised procedure that must be followed to distribute your accounts and property to your beneficiaries after your death. In contrast, with an RLT, probate can be avoided. It's important to note that if you don't have a will, state law will determine who gets your assets.

Pour-Over Will

In the event that you have created an RLT as part of your estate plan, you may also need to create a pour-over will. This document is necessary only if an account or property has not been transferred to your trust during your lifetime or to your trust or another beneficiary upon your death through a beneficiary designation. Similar to a last will and testament, a pour-over will designates a personal representative or executor (usually the same person named as your substitute trustee) and a guardian for any minor children. However, the main difference is that a pour-over will directs that all accounts or property that are subject to probate be transferred to your RLT. While your loved ones will still need to go through probate, your money and property will ultimately end up in the trust and be managed and distributed according to its instructions.

Financial Power of Attorney

A financial power of attorney allows you to designate a trusted person, referred to as your agent, to manage your financial transactions such as signing checks, opening bank accounts, signing a deed, and other tasks that you may assign. It's similar to assigning tasks to a teacher's aide in a classroom. You can tailor the powers granted to the agent and when they can act on your behalf to meet your specific needs. Failing to name an agent can result in your loved ones having to wait for a court-appointed decision-maker with no input from you.

Medical Power of Attorney

A medical power of attorney enables you to designate a trusted person to act as your healthcare decision-maker and make medical decisions or communicate your healthcare preferences on your behalf if you become unable to do so, like a stand-in teacher for your healthcare. Without a formal designation, your loved ones would have to seek court appointment for someone to make medical decisions for you, which may not align with your wishes, and the process can be costly, time-consuming, and public, adding to the stress during a challenging time.

Advance Directive or Living Will

An advance directive, also known as a living will, is a teaching guide that communicates your specific wishes regarding end-of-life decisions. It is crucial to thoughtfully consider your desires regarding life-prolonging procedures and clearly convey them to your chosen medical decision-maker. Without these instructions, your medical decision-maker will have to make assumptions about your wishes, which can lead to stress and potential disagreements among your loved ones if their opinions differ.

Health Insurance Portability and Accountability Act Authorization Form

A Health Insurance Portability and Accountability Act (HIPAA) authorization form allows you to authorize specific individuals to receive information about your medical condition, such as updates on your status or test results. This authorization does not grant decision-making authority to the named individuals; that power belongs to the medical decision-maker you have chosen in your medical power of attorney or the court-appointed individual if you have no valid medical power of attorney. Sharing information with your loved ones can ease anxieties and uncertainties that arise during emergencies. The HIPAA authorization can also help reduce tensions between the medical decision-maker and your loved ones and enable them to understand the reasons behind the decisions made.

 

Next Assignment

Your next task is to contact us so that we can work with you to create a personalized estate plan that will safeguard you and your loved ones. Trusting an estate attorney to help you make the right plan is a great step in the right direction. Preparing a plan will put you at ease knowing your wishes will be honored, all of your assets will be distributed how you'd like, and all of the people you care about are accounted for if you happen to become incapacitated or pass on. Let's work together to create a comprehensive lesson plan for your inheritance planning needs.

Anderson, Dorn & Rader can assist you.

There are various ways for settling issues involving trusts and estates. One of the most popular
alternatives to litigation is a nonjudicial settlement agreement (NJSA). NJSAs are not always the best
line of action, but they can be a good alternative to litigation.

Nonjudicial Settlement Agreements discussion

The Good

The ability to avoid the time, expense, and stress of litigation is one of the main advantages of NJSAs.
NJSAs can be finished very quickly, allowing the parties to go on with their lives, in contrast to litigation,
which can take months or even years to resolve.
Another advantage of NJSAs is that they are flexible. The parties can tailor the agreement to meet their
specific needs and concerns. This means that NJSAs can often result in more creative solutions than
would be possible in court. Additionally, NJSAs are private. Unlike court proceedings, which are generally
open to the public, NJSAs are confidential. This means that the parties can keep the details of their
settlement agreement private and avoid negative publicity.

The Bad

While NJSAs have many benefits, they are not without their drawbacks. One of the main disadvantages
of NJSAs is that they are not binding on non-parties.The parties might believe they have resolved all of
their issues as a consequence, only to find themselves back in court later. Another potential downside of
NJSAs is that they may not be enforceable. This could be especially challenging if one of the parties has
already received their share of the trust assets and won't return them.

The Ugly

Finally, NJSAs can have some ugly consequences if they are not carefully crafted. One of the most
significant risks of NJSAs is that they can result in unintended tax consequences. For instance, the
distribution may be subject to additional taxes and penalties if the parties concur to transfer trust assets
in a manner that isn't consistent with the trust's provisions or the applicable tax rules.
Another potential problem with NJSAs is that they may not be comprehensive. The parties can end up
back in court later if they don't resolve all the problems that may need to be settled. This can be
especially problematic if the NJSA was intended to be a final resolution of all disputes.
There is a chance that NJSAs won't hold up in court if one party later decides to contest the agreement
since they aren't examined or approved by a judge. Furthermore, NJSAs might not be acceptable when
there is a considerable power disparity between the parties because that could allow one of them to put
excessive pressure or influence on the other.

Despite these limitations, NJSAs can be an effective tool for resolving disputes and distributing assets in
certain situations. For instance, NJSAs may be helpful when the parties already have a relationship and
want to keep it even in the face of a disagreement (for instance, when they are family members or
business partners).

Nonjudicial settlement agreements can be a valuable tool for resolving disputes over trusts and estates.
They offer several benefits, including flexibility, speed, and privacy. NJSAs can be non-binding,
unenforceable, and may result in unintended tax consequences or incomplete resolutions. Therefore, it is
essential to get legal counsel from a licensed expert before signing a NJSA to make sure your rights are
protected and the agreement is valid and enforceable.

 

Anderson, Dorn & Rader can assist you.

Looking to resolve disputes over trusts and estates without the time, expense, and stress of litigation? Nonjudicial settlement agreements (NJSAs) offer several benefits, including flexibility, speed, and privacy. However, it's essential to understand the potential drawbacks, such as non-binding provisions, unenforceability, and unintended tax consequences. To ensure your rights are protected and the agreement is valid and enforceable, it's always a good idea to seek legal counsel from a licensed expert. Please contact the estate planning professionals at Anderson, Dorn & Rader.

Ladies, You Need a Plan

Back in 1987, Congress recognized March as Women's History Month to celebrate the incredible contributions of women in American history across various fields. From building a strong and prosperous nation to being the backbone of their families, women have been unstoppable. Yet, in the midst of caring for others, women often neglect their own financial and estate planning. It's high time for women to prioritize themselves by crafting a solid plan that caters to their future needs, which may differ from those of their male counterparts and dependents.

Financial planning by ADR, Women's history month by ADR

Planning Considerations for Women

Longer life expectancies. According to Social Security Administration data, in 2021, women had an average life expectancy of 79.5 years compared to 74.2 years for men. As a result, it is important for women to create an estate plan that accounts for additional years of living expenses during retirement, healthcare costs, and possibly long-term care costs. As women age, there may be a greater possibility that they could become incapacitated and need someone to act on their behalf to make financial and healthcare decisions. Documents such as financial and healthcare powers of attorney and living wills authorize a person they trust to make decisions or take action for them if they are not able to act for themselves. Some women may not only own their own assets but also inherit wealth from both their parents and a spouse who dies before them, and if so, they need a financial and estate plan to optimally preserve and transfer this wealth. Because women may outlive their spouses, they also may be responsible for administering their spouse’s estate or become the sole surviving trustee of a joint trust. These duties may be difficult for a woman who is experiencing health issues that often occur at an advanced age, and this possibility should be addressed in their estate planning. For example, a woman concerned that she will be unable to handle administering her trust at an advanced age can name a co-trustee or successor trustee to administer it if she is no longer able to do so.

Lower earnings. According to U.S. Census Bureau data, women continue to earn less than men, and the pay gap widens as they age. In addition, because some women have shorter employment histories due to time off to raise children or care for aging parents, they may have less saved for retirement. As a result, it is important for them to take steps to protect their money and property from lawsuits or creditors’ claims. For example, a woman could transfer her money and property to an irrevocable trust. Because she is no longer the legal owner of the property, a creditor cannot reach it to satisfy claims against her so long as the trust is properly drafted to include appropriate distribution standards and administrative and other provisions. The woman may be a discretionary beneficiary of the trust, and the trustee may distribute the funds she needs for living expenses. Additionally, because they have less money and property during their retirement, women need to have a solid plan in place to make sure that they are able to financially provide for their loved ones upon their death and that unnecessary costs and expenses are minimized to the extent possible.

Care for loved ones. Many women are caregivers for minor children, adult children with special needs, or aging parents. As a result, they are often concerned about who will care for their loved ones if they are no longer able to do so. If a spouse or sibling is not available to provide care, they need to make sure that another family member or trusted individual can be the caregiver (sometimes called a guardian of the person) for their loved one. The same individual—or someone else—can serve as the guardian of the loved one’s estate (sometimes called a conservator or guardian of the estate) to manage the inheritance for their benefit. In the case of a child with special needs, if no family member is able to take on the responsibility of their care, a group home or assisted living facility may be the best choice. A special needs trust may need to be established to ensure that funds are available for the child’s care but do not decrease the amount of government benefits they are eligible to receive.

Anderson, Dorn & Rader Can Help You Plan Ahead!

You have accomplished a lot in your life! Celebrate your accomplishments and contributions during Women’s History Month by contacting us to set up an appointment to create an estate plan that provides for your own future needs and those of the people you love. You deserve the peace of mind that comes with knowing your future is secure.

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:

A live guitarist's hands are shown riffing to a rock and roll song under blue light.

The Legacy Lewis Left

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.

Scenarios Involving Lewis’s Estate Plan

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.

Will Lewis’s Assets Transfer to His Children?

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:

Issues with Taxes

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.

Potential Plot Twists

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.

You Don’t Have to Be a Rock Star To Have An Estate Plan

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.

Happy family traveling by car.

Entrepreneurial Ventures

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.

Multi-Generational and Blended Families

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.

Providing Guidance for Future Generations

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.

How to Protect a Surviving Spouse

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.

How Much Will Each Family Member Receive?

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 with all things, there is a time for filing taxes, and it's approaching quickly. As soon as January 31st, you'll begin receiving crucial tax documents. Whether you're submitting as an individual or managing an estate or trust, it's time to begin preparations for the April 18th, 2023 tax deadline.

Young couple managing finances, reviewing their bank accounts using laptop computer and calculator at modern home.

Filing as an Individual

Form 1040 is the one used by individuals and married couples to file their yearly income taxes. Keep an eye out for forms indicating your overall income for 2022 in your mail and online, as soon as this January. Here are some of the forms you may need to finish your Form 1040:

It's crucial to keep records of items that can lower your taxable income, such as IRA and health savings account contributions, as well as documents that support tax deductions or credits, such as charitable contributions and mortgage interest. These records will assist you in taking advantage of all the possible tax benefits for which you are eligible.

Filing as an Executor or Trustee

"As an executor of an estate or trustee of a trust, you are responsible for reporting any income over $600 earned by the estate or trust on Form 1041. Even if the income earned is less than $600, if a beneficiary is a nonresident alien, the form must still be filed. However, the beneficiaries, not the estate or trust, are responsible for paying the income tax on the income received. Examples of assets that may generate income for an estate or trust include mutual funds, rental property, savings accounts, stocks, or bonds."

The due date for filing a return for an estate or trust depends on whether it follows a calendar or fiscal year. For those that follow a calendar year, the return must be filed by April 18, 2023. However, for those that follow a fiscal year, the return must be filed by the 15th day of the fourth month after the end of the tax year. The executor or trustee can choose which framework to use. Many opt for a fiscal year, which starts on the date of the grantor’s death and finalizes on the last day of the month prior to the death anniversary. This schedule provides more time for tax planning. If a calendar year is chosen, the tax year starts on the date of death and ends on December 31st of the same year.

Both trustees and executors must report all income distributions given to beneficiaries on the Schedule K-1. You also have to provide a copy of the Schedule K-1 to each respective beneficiary who received an income distribution, and the beneficiaries must report the distribution amount when they file their personal income taxes. The deadlines to submit Schedule K-1 follow the same guidelines as Form 1041 and depend on whether it’s subject to a calendar or fiscal year framework. Since the beneficiaries must report this income on their personal tax returns, it is essential to send them the Schedule K-1 as soon as possible so they have ample time to report the income.

As the trustee or executor, it is important to gather and keep track of your own fees, fees paid to professionals like accountants or lawyers, any administrative expenses, and distributions given to beneficiaries. This way, you can report them on Form 1041, which supports the tax deductions claimed for the trust or estate.

Anderson, Dorn & Rader can assist you with complex tax filing.

It is important to take into account the impact of income taxes when it comes to estate planning and administration. This is true whether you are an individual creating / updating your own estate plan, or administering a trust or estate on behalf of a loved one. If you have any questions on how income taxes should factor into your planning or administration decisions, please contact the estate planning professionals at Anderson, Dorn & Rader.

Recognizing National Mentoring Month: This January, consider these ways to become an estate planning mentor.

If you have children or young loved ones you hold close, you can make a large impact on their development by sharing knowledge to help them succeed in life. January is National Mentoring Month, and there’s no better time to help mentees form goals that will put them ahead of the curve.

An elderly grandfather bestows knowledge to a young grandson.

Usually when estate planning is mentioned, we default to the notion that it only relates to a person passing, or when someone is preparing to transfer assets to loved ones. While these scenarios are definitely part of estate planning, it also involves the development of good habits throughout your whole adult life. This is where mentoring comes in. Teaching your children and other young family members the value of financial and estate planning now can help them in the long run. Here are some ways you can implement teachings and set them up for success:

1. Assist your mentee in reaching their goals by giving small gifts over time.

Start by teaching them the importance of setting goals and how to set them for themselves. For instance, if they want to start a business or pay for college in the future, help them set up a savings or investment account and incentivize regular deposits by matching a portion of their contributions. If they want to give to a charitable cause, match their donations to encourage them. By helping them achieve their goals through their own efforts, they will learn valuable lessons and benefit from the experience. Share your own experiences and lessons learned when pursuing similar goals to further aid in their success.

2. Prepare your mentee to inherit a specific item by educating them about it.

For example, if you plan to pass on a family cabin to your children, give them information on how to maintain it and create a schedule for taking care of it. Share your knowledge and experience you gained caring for it growing up. If you and your siblings were responsible for the cabin growing up, teach them the best ways you found to work together as a team to care for the property. Along with providing practical information, share personal stories and memories about your own experiences at the cabin to communicate its importance and why you want them to have similar positive experiences once it’s passed down to the next generation.

3. Pass on valuable skills to your mentee that you have acquired and consider important.

Share the lessons you learned from your parents about saving money or contributing to good causes. If you have developed money management skills that have helped you build a significant estate and benefit your family and others, invest time in teaching those skills to your mentee. Similarly, if you have found effective ways to evaluate the credibility of charities and make responsible donations, share that knowledge with your mentee so they can make informed decisions. Emphasize to your mentee how these skills have positively impacted your life and the lives of others to stress their importance and the value of learning them.

Need a Professional Mentor? Contact AD&R

Mentoring in a creative way allows you to pass on more than just your assets to your loved ones. You can also share your core values, skills and experiences gained from putting them into practice. If you wish to leave a lasting legacy for your family and loved ones by creating or updating your life plan, reach out to Anderson, Dorn & Rader for help.

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.

Senior couple planning their investments with financial advisor

Are Their Resources Adequate?

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:

Accessibility

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.

What is the Trustee’s Succession Plan?

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.

Will the Nominated Fiduciary Work Alongside Your Beneficiaries’ Advocates?

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.

Northern Nevada Trust Attorneys

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.

Family and friends dining at home celebrating the holidays with traditional food and decoration, women talking together happy and casual

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: The Key To Carrying Out Your Wishes

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.”

Common Milestones to Include In Your Estate Plan

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.

Secure Your Future with Reno Estate Planners

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.

Crypto asset protection professionals

Don’t Let Your Estate Fall Prey to Market Volatility

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.

A Forgotten Password Can Be Costly

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.

A Sudden Passing of A Young Trader

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.

Asset Protection Planning Professionals

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.

Senior Couple walking on the beaches as part of the snowbird lifestyle

Is Your Estate Plan Accurate and Up to Date?

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.

Attorneys to Help With Your State of Domicile

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:

enact a trust

What is a trust?

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.

So How Can A Trust Help Avoid Probate?

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.

Trust Assistance from Trusted Northern Nevada Attorneys

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.

Estate planning near me

Annual Exclusion Gifts

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.

Medical Exclusion Gifts

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.

Educational Exclusion Gifts

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.

Anderson, Dorn & Rader Can Help You Navigate Gift Giving

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.

Let’s examine a scenario all too common for divorced parents and their children. Imagine you just finalized the divorce from your spouse. Your retirement plan from work and your life insurance policy are the largest assets you own, and you have designated your two minor children to receive the money from these accounts when you pass. Your divorce was rather nasty, so of course you do not want your spouse to receive or manage the money in these accounts after you’re gone. They cannot be trusted to pass the money down to your young ones.

You pass away one year later. Both of your kids are still under 18, so in order to receive any assets from your retirement or insurance plan, an adult must be appointed to collect it on their behalf. Of course, the court’s obvious choice of who will take management of the assets is the living parent of your children: your ex-spouse. In Nevada, the caretaker of the money is called a guardian. The guardian has complete control over the funds since your children are not legally able to manage significant assets.

Most often, the loved ones of divorcees bare the brunt of their poor use of estate planning tools. While naming beneficiaries to receive your insurance or retirement assets has good intentions tied to it, these basic tools are often rendered useless by the complexities surrounding dissolved relationships. With the proper planning tools, there are means to fully protect your children’s inheritance against the unknowns.

Update Estate Plans

Adopting a Trust

A trust is a powerful tool that lets you direct and control your estate in ways no other life plan process can. Trusts enable you to manage property while you’re alive, then quickly transfer it upon death. The trust is comprised of a few main players. The person that sets up the trust (you) is often called either the Trustmaker, Grantor, or Settlor. Next is the Trustee, who manages the trust’s owned assets. Usually, you’re the Trustee during your life, then you appoint someone else as trustee to manage the assets when you’re no longer able. Finally, there are the Beneficiaries. These are the people you designate to receive the benefits of the trust (often your children and close loved ones).

Trusts: Protecting Your Children’s Inheritance After a Divorce

A trust protects your children’s inheritance in a few ways:

 

 

Recently Divorced? Contact AD&R to Set Up a Trust.

Gaining full control of how you’d like your legacy to be utilized by you beneficiaries is crucial, especially after divorce. Even if you are wondering whether to update estate plans, Anderson, Dorn & Rader can help to map your trust assets with a comprehensive life plan. We are Reno’s trusted estate planning lawyers. Give us a call or set up an appointment to speak with our knowledgeable staff today.

 

 

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.

Estate Planning Reno

The Generation-Skipping Transfer Tax: What You Need to Know

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.

When Does the GST Tax Apply?

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.

Things to Consider

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.

Have Questions About the Generation-Skipping Transfer Tax?

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.

How to do an estate sale

Are Backup Decision Makers Necessary?

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.

Who Will Look After Your Pets?

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.

Are your Contingent Beneficiaries Lined Up?

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.

Always Think of the Unthinkable

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.

Preparing Your Estate for the Unexpected

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.

Everyone has the right to protect their financial future. At Anderson, Dorn, & Rader, we are firm believers that people identifying as LGBTQ+ should have a comprehensive estate plan in place to ensure that wishes are clear and contentious, costly legal battles are avoided. In the event of an accident, illness, or death, are your finances laid out? No matter your age, sexual identity, orientation, wealth, or marital status, we are here to help you protect you and your loved ones through the estate planning process.

LGBTQ estate planning

Obergefell v. Hodges, the 2015 case that legalized same-sex marriage in the US, was a long overdue victory for LGBTQ+ people and allies. While it did simplify some aspects of estate planning for LGBTQ+ individuals, it did not resolve all of the complex issues ingrained into our nation’s discriminatory legal framework. The reality is that sexual and gender minorities will face challenges that “traditional” people and couples will not. These challenges can involve family members who do not recognize your relationship, child adoption by same-sex couples, and unmarried couples living together.

It’s important to prepare for such instances, otherwise you and your family could be subject to Nevada’s default intestate succession law, which doesn’t always take into account LGBTQ+ couples’ relationship dynamics. Additionally, if you have an existing estate plan that was created before 2015, don’t assume that your same-sex marriage status was automatically updated. Often times, it’s not. A checkup will determine if revisions are necessary to reflect the latest legal rights onto your same-sex marriage life plan.

A Look at Census Data from LGBTQ+ Individuals

The 2020 US Census finally shed light on some LGBTQ+ matters, including the percentage of same-sex couples living together and the number of Americans identifying as LGBTQ+.

The 2020 Census found there are:

The US Census Bureau found (perhaps unsurprisingly) that same-sex couples are more likely to be unmarried than heterosexual couples. Same-sex married couples account for only ~1% of the nation’s married couple households. 2020 Census data also indicate more than 88% of American adults identify as straight, while 4.4% identify as bisexual, and 3.3% identify as gay / lesbian.

Additionally, the Gay and Lesbian Alliance Against Defamation found that young people are significantly more likely than their older-generation counterparts to identify as LGBTQ+, likely due to more widespread social acceptance. Among the entire US population, 12% of adults identify as LGBTQ+, while 20% of millennials identify as LGBTQ—nearly three times the number that Baby Boomers indicated on their Censuses.

Important Steps in Creating an Estate Plan

The word estate can conjure images of a large, lavish country home, but the legal term is different. In this case, it’s all of the property and money a person owns.

Your estate is comprised of all the physical assets you own (vehicle, home, and everything in it). Additionally, it takes into account your bank assets and liabilities, such as investments, business interests, and any outstanding debts you have at the end of your life.

Essentially, estate plans are written instructions on how you’d like your money and property to be distributed when you die. It also considers the circumstances surrounding your ability to make cognitive decisions if you suddenly become ill or incapacitated. The following are the essentials you should have in your estate plan, whether you’re LGBTQ+, straight, or anywhere else on the spectrum:

LGBTQ Estate Planning

The Pitfalls of Not Setting Up a Life Plan

If you don’t plan for what happens to your estate when you are gone, someone else will – and that entity won’t always have your best interests in mind.

Failure to establish an estate plan transfers the decision-making power to the state. From there, they’ll determine where your money and property goes according to Nevada intestate succession law. For the LGBTQ+ community, this is an undesirable outcome due to the inequitable factors within the state’s intestate succession law.

Depending on the state’s laws, your spouse may or may not receive all the items in your estate. The laws could pose greater risk if you are single, as your money and property could go to a family member who does not internally legitimize your relationship or sexual orientation based on their own beliefs.

Unfortunately, even if you are married, your spouse cannot unilaterally make financial and medical decisions for you in the event that you become incapacitated. That’s why it’s important to create a detailed estate plan. Without it, your spouse may have to navigate the legal process to obtain decision-making powers after you pass. Even worse, the court could appoint a family member, no matter how estranged, to make these important decisions for you.

For LGBTQ+ couples with children, further legal complications can arise. The biological parents of the child(ren) usually have legal priority. In severe cases where one, or neither partner, are biological parents, the child could be assigned to their birth parents after you die without a will. Proper planning, such as an court-ordered adoption, can strengthen rights to avoid such cases where LGBTQ+ parents are not legally recognized as guardians.

Regularly Update Your Estate Plan

Luckily, social acceptance for LGBTQ+ people has been steadily increasing over the last few decades, though it still has a long way to go. According to Gallup polling, support for gay marriage has increased from 26% to 70% since 1996.

Civil unions and domestic partnerships were common “workarounds” for homosexual couples to be together prior to the 2015 Supreme Court ruling that made same-sex marriage legal. Unfortunately, previously-recognized arrangements are not automatically updated to reflect current marriage laws within estate planning. This means that without proper reversal, past partners can have a legal interest in your estate. Therefore, it’s important to update the terms of your life plan to reflect your current relationship status, which should include terms like husband, wife, or spouse.

Beyond your current relationship interests and status, your estate plan should also consider other life events that may have taken place. For instance, perhaps you acquired property, received an inheritance, or adopted a child! Our LGBTQ estate planning professionals recommend updating your plan every few years to keep up with life events.

AD&R is Here to Help

No matter if you identify as LGBTQ+ or not, it’s important to have a well thought out plan for how your estate will be distributed after you pass. Anderson, Dorn, & Rader are the region’s only estate planning lawyers who are allies in providing comprehensive financial guidance and documentation for you and your loved ones.

We will create a curated plan that captures your financial picture and situation. For questions about LGBTQ+ estate planning or to get started, please contact Anderson Dorn & Rader to set up an appointment with our knowledgeable attorneys.

 


References:

1 U.S. Census Bureau, Who Is Living Together? Same-Sex Couples in the United States, Census.gov (Nov. 19, 2019), https://www.census.gov/library/visualizations/2019/comm/living-together-same-sex.html.

2 Brian Glassman, Census Bureau Implements Improved Measurement of Same-Sex Couples, Census.gov (Sept. 17, 2020), https://www.census.gov/library/stories/2020/09/same-sex-married-couples-have-higher-income-than-opposite-sex-married-couples.html.

3 Id.

4 U.S. Census Bureau, Sexual Orientation and Gender Identity in the Houeshold Pulse Survey, Census.gov (Nov. 4, 2021), https://www.census.gov/library/visualizations/interactive/sexual-orientation-and-gender-identity.html.

5 New GLAAD Study Reveals Twenty Percent of Millenials Identify as LGBTQ, GLAAD (Mar. 30, 2017), https://www.glaad.org/blog/new-glaad-study-reveals-twenty-percent-millennials-identify-lgbtq.

6 Id.

7 Justin McCarthy, Record-High 70% in U.S. Support Same-Sex Marriage, Gallup (June 8, 2021), https://news.gallup.com/poll/350486/record-high-support-same-sex-marriage.aspx.

Wealth Counsel
© Copyright 2020 Anderson, Dorn, & Rader, Ltd  |   All Rights Reserved  |
  Privacy Policy  
|
  Disclaimer  
|
Attorney Advertisement  
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram