The voice behind the famous song I Will Always Love You, was found dead of unknown causes in the bathtub of her hotel room just hours before the Grammy Awards. The untimely death of the 48-year old singer/actress comes after a decade of personal troubles including drug and alcohol addiction as well as the end of her highly publicized relationship with Bobby Brown. Just hours after her death, sales of anything “Whitney Houston” started to soar. The ultimate value of her estate has yet to be determined; however, it is clear that, as has been the case with other artists, her death may cause her popularity, and therefore her wealth, to increase substantially. The death of the once darling of both the screen and the radio reminds us all of how important it is to create an estate plan.
People often make the mistake of thinking that creating an estate plan is not necessary unless you have a substantial estate at the time. What many people don’t realize, however, is that the value of your estate can soar at any time. Unfortunately, as the untimely death of Houston reminds us, death can also strike at any time. The seed you plant today, whether it is an investment, life insurance, law suit or fledgling business, could be worth a small fortune tomorrow. Those “seeds” will become part of your estate upon your death. Even if they are not worth a substantial amount at the time of your death, they may continue to grow after your death. Deciding who will receive those assets, therefore, becomes important. The only way to ensure that your assets will be handled in the manner you intend is to create a comprehensive estate plan today.
Today, divorce is commonplace. Various studies conclude that just over 50 percent of all marriages end in divorce. It is also estimated that the divorce rate is around 60% for second marriages. Divorce can have a devastating emotional impact on both spouses, as well as for children who are caught in the middle. Aside from the emotional consequences of a divorce, a divorce can also have a significant financial impact on both spouses. Divorce typically leaves at least one, and often both, spouses in a worse financial situation than before the divorce. If you have recently been through a divorce, or are currently in the middle of one, it is critical that you also consider the effect of the divorce on your estate plan.
A number of estate planning documents should be reviewed and amended incident to a divorce. Most people will want to remove an ex-spouse as a beneficiary under their will or trust. If you have minor children, you should also consider appointing one or more people as potential guardians of your children in the event your ex-spouse becomes incapacitated or passes way. Retirement plans and life insurance policies may also need to be changed in order to remove your ex-spouse as the beneficiary. While many state’s laws automatically remove your ex-spouse as beneficiary under your will, trust, retirement plans and life insurance policies, you should make the actual changes so there is no question who you intended to receive your estate and to avoid your family having to take a likely trip to court. Lastly, durable powers of attorneys for both property and health care decisions should be reviewed and amended to remove an ex-spouse from having decision making authority under these documents.
Some of the changes described above should be considered and completed even before your divorce is finalized. However, caution needs to be exercised because certain actions, such as changing beneficiary designations on life insurance policies and retirement plans or transferring assets out of a trust, is forbidden under the divorce laws of most states. Any changes to your estate plan incident to a divorce should only be done at the direction of both your divorce and your estate planning attorneys.
There are various outlets available for bare bones estate planning documents. Some contend that estate planning is as simple as filling in the blanks. Obviously, there are many reasons why one document does not fit all situations.
Something as important as planning for your potential disablity and transferring all the assets that you have accumulated throughout your life to your loved ones is not something to entrust to documents found on the Internet from an unknown drafter. This is a highly sensitive matter that requires professional expertise.
This is true even if you have a seemingly uncomplicated family situation. The truth is most American families are not of the "cookie-cutter" variety. There are often children from previous marriages involved and these blended family situations create the need for specialized estate planning. Some people have business succession issues to deal with. You may have beneficiaries with disabilities or special needs on your inheritance list. There are many other factors that can enter into the equation that require very specific actions.
Since most families are unique the best way to ensure that your estate plan properly addresses your situtaiton is to discuss it with a qualified Reno estate planning lawyer. Once he gains an understanding of your wishes and evaluates your circumstances he can recommend a course of action that is carefully crafted for your needs.
Owning a dog is rewarding in a number of different ways, and for seniors a dog could provide a very welcome companion at a time when loneliness can be an issue. There is no replacing your family of course, but for many people, dogs are indeed man's best friend. You may find that a canine in the household will uplift your mood and perhaps even provide you with protection.
If you are a dog owner you should consider who would be caring for your pet if you were to pass away before the animal. This is obviously a serious consideration for senior citizens who own pets, but it is also important for anyone who owns an animal just as a precaution because life is uncertain at any age.
Your first task is going to be choosing a capable caretaker. It is very possible that a particular person will immediately come to mind. You may have a friend or family member that knows the pet well and who already has somewhat of a relationship with the animal.
Once you determine who would become the pet's caretaker in the event of your death you have to consider the financial side of things. You can provide financial resources to the caretaker by giving this individual a direct inheritance earmarked for the pet's care. A better option, however, would be to create a pet trust for the benefit of your dog. Doing so will keep your pet from becoming a burden to those left to care for it.
If you have any questions about pet planning, simply take a moment to arrange for a consultation with a good Northern Nevada estate planning lawyer.
Statistics tell us that only around half of Americans have any type of estate plan in place. Going through life without an estate plan is taking a risk that can easily be eliminated. If you need some motivation, simply envision where your family would be if you were to pass away today. When you make plans for all contingencies you are protecting those that you love.
If however you deceased without an estate plan in place the intestacy rules of succession would apply. "Dying intestate" means dying without having executed a valid last will. There are those who understand that there are intestacy laws of succession. They may not take estate planning very seriously because they assume that their next of kin will inherit their estate. This could be a crucial mistake. You may be shocked who would actually inherit your estate under the laws of intestacy.
The estate will be administered under the jurisdiction of the probate court if you die intestate. Tthe probate process can be extremely time-consuming, expensive and public in nature. Also, iterested parties can delay the process with objections and creditor claims.
The fact of the matter is that estate planning is not optional if you truly care about the well-being of your family. If you are currently unprepared now would be a good time to take action and arrange for a consultation with a good Reno Estate Planning attorney.
Most people tend to procrastinate when it comes to estate planning. In fact less than half of people in the United States have a last Will or a Living Trust in place. Since so many people procrastinate before they put an initial estate plan in place, they are also prone to procrastinate when it comes to updating their existing estate plans.
Life is never constant - except, of course, for constant change. Circumstances in your life will change over the years, and these changes may call for an estate plan revision. There may be people who join the family, others who leave, and your financial situation could change dramatically. A review of your estate plan will reveal if there are needed changes.
In addition, a high percentage of marriages end in divorce and most of these people remarry. Changes in marital status are almost definitely going to make an estate plan update necessary.
We have just entered a brand-new year and as you turn the page on the calendar you may want to make a mental note to yourself regarding an estate plan review. This is especially true in this election year with the distinct possibility of the sunset of a very generous estate tax exemption.
In addition to the things that happen to you personally, of which you would be well aware, there are also legislative changes and alterations to the tax code that take place on an ongoing basis. Many of these can be relevant to your existing estate plan.
It is a good idea to review your plan at least ever three years with professional guidance, and if you're ready to do so simply take a moment to arrange for a consultation with a qualified Reno Estate Planning lawyer.
You have a trust or a will in place, so you have determined how the distribution of your assets will take place upon your death. That is great, because now you are at least assured that the "government plan" or intestate succession is not necessarily your plan. Further, with a funded trust, your estate will also avoid unnecessary and unwanted probate.
Your estate plan will also avoid unnecessary disputes about the distribution of the estate. Each family is different but how do you think a typical family may react if it was up to them to agree upon how the assets of a loved one should be distributed? Clearly, in many cases, consensus would be hard to come by. You don't have to worry about this when it comes to your estate, but there is an issue that is often ignored. That issue is the funeral planning.
If you were to pass away without leaving behind any instructions regarding your funeral details your family members could wind up disagreeing. Of course, this comes at a very difficult time for families. If one family member takes charge and arranges for cremation when other family members have moral or religious objections, it can create a rift in the family. Even choices of caskets, the amount spent on the funeral arrangements and the choice of burial clothing can create hard feelings at a highly emotional time.
Even if there are no particular disagreements among family members, someone is going to have to take up serious time in making these arrangements at a time when they are grieving and in no mood for it.
If you take the time to make your funeral arrangements in advance, you can even select the facility, casket and clothing of your choice and pre-pay should you choose to do so. To learn more about including final arrangements in your estate plan, get in touch with an experienced northern Nevada estate planning lawyer to arrange for a consultation.
The dictionary definition of the word "legacy" will tell you that your legacy involves gifts of property and monetary assets after your passing. This is of course a large part of it, but there could be more to shaping your legacy than simply arranging for the passing of your assets to your family members.
Depending on your resources exactly how you go about this can vary considerably. There are those who will make a donation that is specifically used to finance some type of building project. This may carry your name into perpetuity, which can be quite rewarding for many people.
Some people will leave behind the resources to provide a scholarship or scholarships to worthy students. This too can be an enriching portion of an individual's legacy.
You can also choose to pass along the wisdom that you have acquired throughout your life by committing your experiences to writing. Some people choose to write a full-blown autobiography and leave it behind for future generations to draw from. Others will author an ethical will that passes along their moral and spiritual values. Today, there are many resources to assist in writing an interesting personal history that can be found online or in bookstores. The same is true of writing an ethical will.
Carefully selecting certain family heirlooms and/or personal possessions and handing them on to particular respective heirs for specific reasons can also be part of a carefully planned legacy.
There are many possibilities to take into account when you are preparing for the latter portion of your life and your eventual death. If you're interested in taking estate planning to a higher level, don't hesitate to get in touch with a Northern Nevada legacy planning attorney to arrange for an informative consultation.
Partners in small businesses that are engaged in the process of estate planning can be faced with a tricky situation. If you were such a partner you would probably want the value of your business to be spread among different family members after your passing. So, this business interest would have to be sold to provide the necessary liquidity.
But, how will your partners feel about this? They would be forced to deal with whoever it is that purchased your share in the business whether they feel comfortable working with this individual or entity or not.
The way that situations such as these are often addressed is through the creation of buy-sell agreements. These agreements utilize the purchase of life insurance to allow the remaining partners to buy the share of the deceased partner from his or her family.
With the cross purchase plan each of the co-owners in the business takes out a life insurance policy on every other. After one of them dies the combined insurance policy proceeds are used to buy the share that was owned by the deceased individual from his or her family.
Another type of buy-sell agreement involves the business itself taking out life insurance policies on all the co-owners equal to the value of each respective share with these proceeds being used to buy the share of the deceased partner from his or her heirs. This approach is called the entity plan.
Buy-sell agreements can provide a relatively simple solution in some cases. To learn more about small business succession planning, simply take a moment to arrange for a consultation with an experienced and licensed Reno estate planning attorney.
When you consider the subject of estate planning it is useful to recognize the fact that it is an ongoing process. Your initial estate plan is going to be based on a snapshot of your life as it existed at that time. Clearly, things do not stand still and events happen in your life that often times render your existing estate plan obsolete. Things like changes in marital status and additions and subtractions to the family would fit this description.
In addition, there are things that take place that are out of your control that affect your estate planning efforts. Legislative changes that impact the tax code are among them, and with this in mind we would like to take a look at the lay of the land at the present time.
The estate tax and the gift tax are unified, and at the present time there is a $5 million unified exclusion. So if your estate and any gifts that you have given utilizing your unified exclusion do not exceed this amount no estate or gift taxes will be levied. Estates or gifts exceeding the exclusion are taxed at 35%. Keep in mind that any gift exceeding the annual exclusion amount of $13,000 per person, reduces the estate tax exemption by the amount of the gift.
Those parameters are only in place through the end of next year. At that time the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 will expire and the rate of the tax will rise to as much as 55% while the unified exclusion is reduced to just $1 million.
So, this presents an interesting situation. The $5 million exclusion becomes a $1 million exclusion when 2013 arrives, so it would be logical to consider giving gifts to your loved ones in 2012 before the exclusion is reduced.
Of course it is possible that changes to the laws could take place at any time, and this is another factor to consider. Clearly, the pending reduction of the exclusion is food for thought and it is something to discuss with your estate planning attorney.
Inheritance planning is really a comprehensive endeavor and it entails more than simply directing the transfer of assets via the execution of documents. There are numerous practical considerations that require communication with family and loved ones. Some feel as though they will always have time to communicate their wishes at some point in the future when they have more time. For many the topic of death is s difficult topic to discuss. Though these concerns are certainly understandable, procrastination can leave your loved ones in a difficult situation. You never know what lies ahead and this is what intelligent and comprehensive advance planning is all about.
It is a good idea to ask yourself what your family members would be faced with if you were to pass away on a purely practical level. Are there keys to vehicles and perhaps real property that they should have or be able to obtain? Do you have a safe deposit box? If so, who has access to it? Documents are another matter to consider. Do your your family members know where to find documents that would be relevant to them if you were to pass away? Who has passwords to accounts and other information on your computer files?
Since we live in the digital age a lot of people have important passwords and usernames that their loved ones would need if they were charged with the responsibility of handling the final affairs of the deceased. This can include social network identities as well as business relationships.
These are just a few specific things to keep in mind. Take time to compile a list of items that you should communicate to your loved ones so they will be prepared to handle the practical matters that they will face when the inevitable ultimately takes place.
There are a lot of details to take into consideration when you are planning your legacy, and the best way to address them is with the assistance of an experienced estate planning attorney. Rather than being consistently confronted with a series of unanswered questions as you think things through it is much simpler and more efficient to sit down with a legacy planning professional and work through the process from an informed perspective.
Experienced estate planning attorneys know how to proceed under any circumstances and they also understand how to adjust your estate plan on an ongoing basis as changes both within your life and throughout society as a whole take place that impact your existing plan.
One of the intricacies that people often face when they are engaged in inheritance planning involves providing for minor children. There are a number of different ways to proceed, and one of them would be to create a trust and make the child the beneficiary.
You can stipulate whatever you would like to in the trust with regard to what expenditures the trust is empowered to make in behalf of the child while he or she is still a minor. The grantor could then go on to set forth the terms for distribution of assets after the child becomes a legal adult.
Some people allow for the transfer of the total lump sum when the child reaches a particular age, and others arrange for more gradual distributions. You could even choose to include incentives such as allowing for regular distributions while the beneficiary remains in college with a lump sum to follow upon graduation.
Short of creating a trust you could name a property guardian in your will or appoint a custodian under the Uniform Transfers to Minors Act. At a minimum, parents of minor children must have a will where a guardian of the person of your children can be named.
Providing for minor children is an important part of many estate plans. If you would like to learn more details, simply arrange for a consultation with an experienced estate planning attorney.
Estate planning involves consideration of the time when you are incapable of making your own decisions or when you are deceased. This requires the choice of representatives to administer your estate. One of those representatives includes your trustee or personal representative. If you have a trust or will then you have selected someone to perform the hands-on tasks involved in administering your estate. This individual should possess a certain measure of business acumen to handle all of the affairs of the estate. Property will be liquidated in most cases, there will be bills to pay, and the executor will have to bring in a probate attorney and in many cases an accountant and an appraiser. It is natural for some people to automatically choose someone close to them to be a personal representative, but it is not merely a ceremonial role. The practical responsibilities that accompany this title is something to take seriously.
There may come a time when you can no longer make sound medical and financial decisions for yourself. To address this issue you should be prepared with a durable power of attorney for health care and a durable financial power of attorney. Again, you should consider your choice of representatives carefully. You don't have to select the same person to serve both roles. In many cases the best financial mind is not going to be the person that you would like to see making your medical decisions.
Choosing the people who will take care of your affairs upon your death or incapacity is an important part of the process of estate planning. Careful consideration should be given to who who would fill these important roles in your estate plan.
There are a number of misconceptions about estate planning that are simply not true. One of them involves the notion that the estate tax only applies to the "rich." First of all, how is the word "rich" being defined in this context? Multi-billionaires may easily fit this description. However, would you consider yourself rich if you and your spouse accumulated say $2 million over the course of your lives, including any inheritances you may have received? Most people would say no, but if you had an estate valued at $2 million and you took no estate planning steps your estate would be subject to approximately $550,000 in estate taxes if you died in 2013 as the laws stand right now.
Another misconception is that legal representation is too expensive to be worth it. In reality, most people are going to save far more money than they pay when they work with an estate planning attorney. This is why wise people retain legal counsel to assist with their estate planning.
Also there are common sources of asset erosion that can be avoided or minimized, such as the estate tax and probate expenses. You also would want to make sure that your wishes aren't challenged. These are only some of the many reasons why you would do well to work with an experienced estate planning attorney.
The last misconception we will address is the idea that you can establish your own estate plan using general template documents. Estate planning even for very modest estates generally involves many complex considerations that simply cannot be provided for by a form. Many estate planning issues are unique and very personal. The nuances of these types of issues can only be properly identified and addressed by an experienced estate planning attorney.
The last will is a document that most people are familiar with and is the most common estate planning tool. In fact, many movies have romanticized the proverbial "reading" of the last will of a deceased family member. We can all imagine a family gathered in a lawyers office as the will is read, letting each person know what they received, or did not receive, from the estate.
Most people know that there are other legal instruments that can be utilized. But a lot of them are under the impression that only people of extraordinary wealth need to step outside of the tried-and-true last will as a primary vehicle of asset transfer.
In reality, people of ordinary means may want to consider alternatives to a last will when they are making plans for the future. There are a number of reasons for this, but the most compelling one is the fact that your estate must be probated if you use a last will.
The process of probate can slow things down considerably. During this interim the probate court examines the will in an effort to determine whether or not it is valid. So, at this time interested parties who may not agree with the contents of the will could step forward and present challenges. This can result in a long and drawn out legal struggle. Just think back to the case of Anna Nicole Smith. That battle was just resolved last summer some 15 years after it began.
Probate is also a source of asset erosion. There are costs that the estate will incur while it is being probated. Depending on the size of the estate, the nature of the assets contained therein, and whether or not there are any challenges costs could reach 4-8% of the total value of the estate and in some cases even more.
Most people are not going to be fully informed when they start making plans for the future. The worst way to plan is to rely on Hollywood's representation of what an estate plan should look like. The best way to gain an understanding of how to proceed given the unique nature of your circumstances is to consult with an experienced, savvy estate planning attorney.
You find individuals who are in difficult positions sometimes pointing fingers at others who are enjoying a comfortable retirement or benefiting from an estate plan that was intelligently conceived by their loved ones. They say that these people are "lucky" and decry their own lack of such luck. But in reality, those who have no worries simply benefited from proactive, pragmatic planning. And of course they had the self-discipline to stick to the plan. It is as simple as that.
Our law firm understands this to be true and we try to educate people and encourage them to take action so that they can avoid the pitfalls that invariably accompany a lack of preparation. Unfortunately, a very high percentage of Americans ignore this advice and go through life without making important preparations for the future.
The results of a Harris telephone survey that was released at the end of 2009 shed some light on the subject. A total of 1,022 adults responded, and a mere 35% had composed a last will to elucidate their final wishes. Just 29% of the people who were interviewed said that they had a living will in place.
Merely 24% of people under 35 had executed at least one of the commonly recommended estate planning documents, and of course you would expect younger people to be less prepared. However, a surprisingly high 23% of people surveyed who were over the age of 55 had executed no estate planning documents at all.
Clearly, a lack of appropriate planning has reached epidemic proportions. When you shirk this basic adult responsibility, for the most part it is your family members who are going to suffer after your death or incapacity. This is a serious matter, and if you do not presently have at least a basic estate plan in place, do take action and arrange for a consultation with an estate planning attorney before it's too late.
When you are serious about making informed plans for the future you have to be aware of all of the options that are available to you and how to use them effectively. Depending on the resources that you have and what your legacy intentions are some of the instruments that would be useful are rather complex. So, unless you are in the field of financial planning or elder law you probably are not going to have a comprehensive understanding of the challenges that exist and the appropriate responses that are typically utilized by estate planning professionals.
This is why it is important to develop a good working relationship with a legacy planning attorney you can trust. He or she will gain an understanding of your wishes, evaluate your assets, and make the proper recommendations so that your legacy goals will eventually come to fruition.
One of the tools used that can provide tax savings as well as asset protection is the charitable remainder unitrust, which in estate planning circles is often shortened to the acronym CRUT. You create and fund the trust and name both a charitable and non-charitable beneficiary. The non-charitable beneficiary must receive annuity payments equal to between 5% and 50% of the fair market value of the trust annually, so most people are going to act as their own beneficiary. You could serve as the trustee as well.
At the end of the trust term, which can be upon your death if you choose to set up the trust in this manner, the charitable beneficiary assumes the remainder that is left in the trust. This remainder must equal at least 10% of the original fair market value of the CRUT.
Assets that are placed in the trust are no longer the personal property of the grantor so they are protected from creditors and claimants. From a tax perspective, the act of funding the trust reduces the value of your estate for estate tax purposes. And there are also capital gains tax advantages if you fund the trust with appreciated securities. In addition, you are entitled to a charitable deduction, the amount of which is determined by the application of IRS rules regarding charitable remainder unitrusts.
If you have an estate that will likely be subject to an estate tax at your death, make an appointment to meet with a legacy planning attorney to discuss a CRUT or other methods of reducing your taxable estate.
People often tend to procrastinate before they take action and execute the appropriate estate planning documents. Their reasons vary, but it is human nature to prioritize things based on how immediately relevant they may seem.
The current average life expectancy in the United States is over 78 years. So when you are in your 30s, 40s, and 50s you may simply think that you have plenty of time to plan your estate at some point in the future. You may even think that it is better to wait because of pending or unknown factors concerning your estate. The reality is that if you pass away without an estate plan you are potentially leaving your family members a very difficult situation to deal with.
When some finally take the plunge and work with an estate planning attorney to create a plan they put their documents in a lock box mistakenly believing that they are done. It is likely however that your estate plan will need updates as your life changes. For instance your family may experience additions or subtractions through marriages, births, deaths or divorces. The development of a disability by a beneficiary would also require special planning techniques.
Estate planning is best viewed as an ongoing process rather than a one-time event. For this reason it is a good idea to develop a working relationship with a qualified estate planning attorney which will last throughout your life.
