New Estate Tax Portability Provision Should be Considered with Caution
April 30, 2011
5 Missteps That Can Sabotage Your Estate Plan
April 27, 2011
When it comes to protecting your wealth and your family creating an estate plan is one of the most important things you can do. An estate plan is your key to ensuring that your hard-earned assets are distributed (or saved or invested) as you designate. An estate plan is your family’s safety net. Unfortunately, too many people attempt to take shortcuts with their plan, and find themselves with a safety net that is falling apart just when they need it most. Below are 5 of the most common missteps that can sabotage your estate plan, and how you can avoid them.
1. Neglecting to fund your trust. A trust can be a wonderful tool for protecting your assets; flexible and customizable, a useful trust can be created for just about every situation. But a trust is like a strongbox—if you don’t fill it up it has nothing to protect. Accounts and assets must be put in the name of your trust for it to work as you’ve designed it to.
2. Not enlisting the help of an estate planning attorney. There are a number of Do-It-Yourself will and estate planning programs out there that promise you a full estate plan for a cheaper price; but estate plans are complicated things, requirements change depending on your state of residence, the size of your estate, the age and situation of your beneficiaries, and much more. If you aren’t able to work with an attorney to create your plan, at the very least we urge you to have an attorney review your plan before you sign it.
3. Neglecting to mention previous estate planning documents, or making unofficial changes in the margins of documents that have already been signed. When creating a will or a trust or any other common estate planning document it is usually necessary to revoke any previous documents so there is no confusion about which document is current and valid. Neglecting to do this can end with your assets tied up in probate court for months or years—or even worse, invalidating both documents completely.
4. Putting your plan somewhere safe—somewhere so “safe”, in fact, that nobody can find or access it! People recognize that estate planning documents are things of value, and as such should be protected in a locked filing cabinet or safe deposit box. Wherever you choose to store your documents, be sure one or two trusted individuals have not only the knowledge of where the documents are, but also the ability to access them. An estate plan does no good if it cannot be accessed when it’s needed.
5. And finally, one of the most common missteps that can sabotage your estate plan is failing to update your plan regularly. Not only do federal and state laws change periodically (as we have recently experienced) but you will undoubtedly experience changes in your own life and fortune. Failing to update your plan to keep up with the law or with your own life can result in an estate plan that is as useful as a car you neglected to maintain—it may look fine on the outside, but it simply won’t run anymore.
Understanding Your Last Will and Testament
April 19, 2011
Although recent news surrounding the estate tax—both its repeal and its reinstatement—has died down, many people are still talking about their estate plans. Most people recognize that now is the time to create their estate plan, or to review and update their existing plan if they have one. This means that many people are asking questions about the primary document in just about any estate plan: the Last Will and Testament.
What is a Will?
A will is, for many people, the cornerstone of their estate plan. In fact, if you only create one estate planning document (which we don’t recommend) that document is probably a will. A will is the document which details your wishes about how and to whom your property will be distributed upon your death. A will can list your property in great detail, or it can make a statement about “all my legal property” in general. Your will names an executor, the person who will carry out your wishes as detailed in the document. And if you have minor children your will can name guardians, the adults you choose to care for your children in your absence.
What is required to make a Will?
At its heart a will is very simple. Requirements will differ depending on your state of residence, but there are some basic requirements that will be the same across the board:
- A will must be created by a person who is of legal age, who is proven to be of sound mind and judgment, and who is under no duress.
- A will should revoke all previous wills and codicils.
- A will should be signed and dated.
- A will generally needs the signatures of disinterested witnesses, and in some states must also be notarized.
It is important to note that there is no requirement that a will must be created by or with an attorney; however, homemade wills have been frequently found to be invalid, or have been contested by disgruntled heirs or potential heirs, so having the help and advice of an attorney is highly recommended.
What happens if you don’t have a Will?
If you don’t have a will your property will be distributed according to the intestacy laws of your state. Property will generally be inherited by a spouse, or by a spouse and children. If there are no spouse or children, then property will generally go to living parents or siblings, then to nieces, nephews, or other living relatives who can be found. The state will choose an executor for your estate, as well as guardians for any minor children you have. Unfortunately, the people chosen by the state to serve in these roles may not be the people you would have chosen. Additionally, the probate process is likely to be even longer than usual as the extent of your estate, as well as any outside claims to it, are investigated.
Luckily, there is very little reason for anyone to die without a will. Although wills can be designed to be as comprehensive and intricate as you like, they are at heart very simple documents which can provide peace of mind for you and your family. Contact our office—or another attorney you trust—to help guide you through the process of creating your own last will and testament.
Royal Couple Has Many Asking “How Effective Are Prenuptial Agreements?”
April 12, 2011
It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th. Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?
The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more. Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts. But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.
Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better. Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.
The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.
Each party should have their own legal representation. In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.
Details regarding children or child support in a prenuptial agreement may not be enforced by most courts. Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.
Waivers of Spousal Support (alimony) Will Be Carefully Construed by California Courts. Any attempt to waive spousal support in the pre-nup will be carefully construed in the event of divorce, and may or may not later hold up, so just beware.
Seniors with children from prior relationshps, who remarry later in life, often consider pre-nups as a way to ensure the inheritance of their own children. So, its not just above divorce. Hopefully, these tips can help ensure that your agreement will be considered valid by a court should the need for enforcement arise down the road.
Making Room For Mom & Dad: Checklist For The “Multi-Generational Household”
April 8, 2011
Throughout history, the multi-generational household has always had its place in our society. At times the multi-generational family has been common and plentiful, at other times rare and seen only on the fringes of society. In the past few years, for reasons of both economy and practicality, the percentage of Americans living in multi-generational households has been steadily rising. In fact, a recent article in the Wall Street Journal states that “In 2008, a record 49 million Americans, or 16.1% of the population, lived in households with at least two adult generations or a grandparent plus one other generation, according to the nonprofit Pew Research Center in Washington. That is up 17% from 2000.”
Although multi-generational living had fallen out of fashion in the decades prior to this, there are a number of reasons why inviting elderly parents to live with you can benefit the entire family. “By living together, families say they are better able to meet one another’s needs for child and elder care. Moreover, money saved on rent can help finance a graduate degree, a job search or a down payment on a house, or offset the costs of long-term care.”
But setting up housekeeping with your parents (or your kids) isn’t as simple as merely moving furniture, often there are financial—or even legal—details to be worked out. Here are some of the things you should discuss before you build the “in-law extension” in your home:
Will the situation be permanent or temporary? Whether your kids are moving back in until they find that dream job, or your parents are coming to live with you until they find the right retirement community, it’s important to discuss these goals and practical steps that will be taken to reach them. “Those who prefer a temporary arrangement should work out an exit strategy—for example, by estimating how long it will take a person experiencing financial problems to regain his or her footing.”
Will the “new tenants” pay rent, or make any other contribution to household expenses? If so, it is absolutely imperative to work out a rental agreement before hand. Also, the “landlord” will need to ascertain whether the rent they collect should be reported to the IRS as income. “Some landlords simply aim to cover the extra expenses they incur. In that case, they owe no taxes on the payments they receive, ” according to the source quoted in the article.
If two generations are looking to purchase a new property together, there are completely different details to be considered. “When generations join forces to purchase or modify a property, each should retain an advisor to review the tax and estate-planning consequences and protect their investment in the event the union dissolves.” Additionally, “joint ownership can pose problems for those who may need to rely on Medicaid to cover future nursing-home costs.” It is a good idea to consult with an elder law attorney before signing any contracts.
There are many benefits to living in a multi-generational household, but even with all these benefits it is hardly an agreement to be entered into lightly. Families considering taking this step should discuss it not only with the entire family, but with their financial and legal advisors.
What Happens Now to Elizabeth Taylor’s Fortune?
April 6, 2011
The recent passing of Elizabeth Taylor has many wondering what will now happen with her sizeable fortune? According to this article in Forbes Ms. Taylor’s fortune includes not only the millions she made in the Hollywood movie industry, but the even greater amount made she made with her fragrance line.
“In her most savvy business move, Taylor licensed her name to Elizabeth Arden and came out with several perfumes, including Passion, White Diamonds, and Black Pearls. Her fragrances have reaped a reported $200 million in sales over the years. Perfumes are one of the highest margin products out there, which is why celebrities love them. Taylor was doing it before anyone.”
Furthermore, a recent article in ABC News reports that Elizabeth Arden has no plans to discontinue the Taylor brand anytime soon. “White Diamonds remains a best seller almost 20 years after its 1991 introduction, a testimony to her transcendent and enduring appeal… Our best tribute to Elizabeth Taylor will be to continue the legacy of the brands she created and loved so much.”
The question now is, what will happen to this sizeable (and growing) fortune now that Ms. Taylor has passed away? ABC News has some guesses: “On the question of what could happen to her estate now that she has passed away, many speculate it will be distributed to her four children and 10 grandchildren [with whom she is reported to have been on good terms]… And Taylor most likely bequeathed a substantial amount of money to her charitable work. Taylor was a devoted AIDS activist, helping form the American Foundation for AIDS Research in 1985 and the Elizabeth Taylor AIDS Foundation in 1991.”
Thus far no last will and testament has been released, which suggests that Ms. Taylor may have had a trust, an document which typically ensures privacy. While it is only our speculation at the moment, given what we do know about Ms. Taylor, it is not unreasonable to believe that her estate will be split between her family and her charitable endeavors, especially the AIDS Foundations to which she gave so much in life.
Jinies.com