Estate planning is the process of creating documents that legally determine how your assets will be distributed after your death, including who inherits, who controls the distribution of your assets, and when your beneficiaries receive your assets. While most of us do not like to think about dying, we all want to care for our families when the unpleasant inevitable occurs, and estate planning allows us to do just that.

The first step estate planning is to account for all of your property, such as real estate, personal property, life insurance, bank accounts, retirement plans, securities, and business interests. Once you have an accurate picture of what is in your estate, you can easily make decisions about who should inherit your assets and how.

People often believe they do not need an estate plan because they do not think they are “wealthy” or that they have an “estate.” Everyone has an estate that needs to be planned – it is only a matter of how large it is. Creating an estate plan allows you to decide what happens to your family and your assets at your death and helps to provide you with peace of mind as to the protection of your legacy after you pass away.

One of the less talked about, but equally important aspects of creating an estate plan is making sure that you choose the right executor or personal representative for your estate. A personal representative is a person, appointed by the decedent’s Will or the court, to manage and administer the decedent’s estate and its associated assets. The personal representative may be the executor, who is the person named as such in the decedent’s Will; the successor to the executor; or an administrator appointed by the court where the decedent died without a Will naming an executor (this is referred to as intestate, or intestate succession). The terms personal representative, executor, or administrator can essentially be used interchangeably.

Generally, anyone can be an executor or personal representative, with a few major exceptions which differ by state. Florida law states that an executor must be at least 18 years old, cannot be a felon, and must be mentally and physically capable of serving (must not be determined legally incapacitated by a court).  While it is usually best practice to name someone who lives close to you, Florida law does have requirements for naming out-of-state executors. Namely, the non-resident executor must be related to you by blood, marriage, or adoption.

It is imperative that you made the right decision as to who will serve as the executor for your estate, as this person will have a significant degree of control over your assets and, in turn, your legacy after you pass away. But what are some the factors and questions you should ask yourself prior to deciding who will serve as the executor of your estate?

First, while this can be easier said than done, while making this important decision as to who should serve as your estate’s executor, you should choose someone based on their suitability for the role in a practical sense rather than based on emotional considerations or their relation to you. While many people may want to choose their son or daughter to serve as executor of your estate, this may not be the best decision based on practical concerns. For example, if you know that your son or daughter has had difficulties in the past with managing money or assets or you know that their personal wishes do not necessarily align with your personal wishes and goals for the administration of your estate, another person may be a better choice. While it can be challenging to remove your emotions from this potentially difficult decision, it is important to remember that estate planning is done for the protection of your estate, your family/friends, and your legacy, and as such, your own wishes for your estate are key. You want to pick someone that you can trust to follow your wishes and administer your estate exactly as you have directed, who will not disregard your wishes for their personal goals or benefit.

Trust is obviously a major factor in choosing an executor, and as such, many choose a family member of close friend. The most common choices for an executor often include spouses, children, or siblings. The key qualities for an effective executor include honesty, communication, and organization.  The distribution of assets can become a nightmare if handled by someone with lacking organizational or communication skills. You will also want to ensure that your choice is someone who is both personally and financially responsible. It is also a good idea to name an alternate executor, in the event your first choice does not work out or something happens to your first choice, such as death, incapacitation or major illness.

If you do not have a friend or family member with these skills, then it might be time to look outside of your circle and hire a professional. Third party executors can include banks, attorneys, and trust companies, to name a few. The Orlando Law Group provides this service, acting on your behalf after the event of your death to ensure that the burden of handling your estate is undertaken by professionals. Choosing a professional executor can also help to lessen the burden placed on your family and friends during a difficult time.

The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

Your CPA can help you determine the value of your estate and figure out how to reduce the tax liability. For example, you can reduce the overall size of your estate by spending some of that hard-earned money beforehand. You probably have already chosen whom you want to leave your assets to after you die. If you can afford it, give some gifts now. Enjoy seeing the results and appreciation of your gifted assets.  Federal law lets you give $14,000.00 a year ($28,000.00 if you are married) to as many people as you wish tax-free.

You can also remove the value of your life insurance from your estate by transferring ownership of the policy to an Irrevocable Life Insurance Trust.  This can reduce or even eliminate estate taxes, so more of your estate can go to your loved ones. The benefits will not be included in your estate as long as you live 3 years after the transfer of the existing policy.

You can also convert stocks and investment real estate into a Charitable Remainder Trust. This is beneficial as you get an immediate charitable income tax deduction and it removes their financial value from your estate.

There are many options when it comes to estate planning.  All of which your attorney and accountant can assist you with. The best benefit is peace of mind.

 

Wanda Talley Schebel CPA, has been providing quality, personalized financial guidance to local individuals and businesses throughout Central Florida for over 25 Years. Her expertise ranges from basic tax management and accounting services to more in-depth financial planning for clients of all incomes. She has represented many clients before the IRS. Wanda has taught the IRS VITA classes and holds seminars on business management and budgeting. She is a licensed Certified Public Accountant in both Florida and Louisiana. 

Estate planning is the process of creating documents that legally determine how your assets will be distributed after your death, including who inherits, who controls the distribution of your assets, and when your beneficiaries receive your assets.

The first step estate planning is to account for all of your property, such as real estate, personal property, life insurance, bank accounts, retirement plans, securities, and business interests. Once you have an accurate picture of what is in your estate, you can easily make decisions about who should inherit your assets and how.

To create your directions for distribution to whom you want and how you want, typically you will work with an attorney to draft one of two types of documents – a Will or a Revocable Living Trust.

  • A Will, or Last Will and Testament, is the fundamental piece of any estate plan. A will functions to provide your instructions for distributing the assets you own individually or share ownership as tenants in common when you pass away. A will can also work in conjunction with a Revocable Living Trust at your death to “pour over” any assets that you did not transfer to the trust during your lifetime.
  • A Revocable Living Trust is an alternative in many ways to a will. A trust is a legal agreement where you transfer your assets to a trustee who holds title to the assets on behalf of someone else (your “beneficiary”). A beneficiary can be you, your spouse, your children, or others. A Revocable Living Trust allows you to transfer all (or part) of your assets during your lifetime into a trust to be held on behalf of your beneficiaries. You can name yourself or another person or institution to serve as Trustee, depending on who you want to manage your assets. As a revocable trust, you usually can change the terms of the trust and who the beneficiaries are at any time before you pass away.

LIVING TRUST:

What is a living trust? A trust is a formal agreement you make with a trusted person, or trustee, to convey property as directed by you. A living trust is a trust that you create during your lifetime. These documents are in effect regardless of whether or not they contain property until your death.

Perhaps the greatest asset to utilizing a living trust is the ability to avoid probate because they pass to beneficiaries under the terms of the trust and not a will. Probate is the court system in which a person’s affairs are wrapped up subsequent to their death. Probate is costly, lengthy, and unnecessary for most estates. By dividing your property in a living trust, you are able to avoid this process and future headache for your loved ones. Property can be distributed to beneficiaries after the death of the grantor without incurring any fees or court interference.

Another benefit of a living trust is that it remains private. The contents of a will become a public document. Many people choose this route to keep their affairs private.  Also, while wills can be challenged through lawsuits, it is infinitely more difficult to attack a living trust.

Unlike wills, however, a living trust requires the signature and stamp of a notary public. Also, while a will can appear in any format, property left through a living trust must be first transferred into the trust. For items such as real estate, which include title documents, retitling must occur so that the owner of the property is the trust.

WHY A WILL THEN?

You might be asking yourself, if I have a living trust, then why is creating a will even necessary? Make no mistake, wills are vital documents to include in your estate plan. First, a will is the primary estate planning document which regulates your wishes in regard to your inheritance and guardianship. A will can pass on certain rights that a trust cannot. It is only in a will that you can name legal guardians for children, as well as someone to manage any properties left to or earned by minors.

A will also gives you the right to name an executor who will be in charge of wrapping up your estate after your death. That person communicates with the court, pays your bills, and eventually distributes any property that has to first pass through probate. Living trusts do not allow for an executor, and rather names a successor trustee who will solely manage the property left through that trust.

A will also gives you the ability to leave instructions regarding how you want your debts and taxes to be paid, as well as forgive any debts owed to you. Wills are far simpler to create and require only the presence of two witnesses who will not receive anything under the will.

IN CONCLUSION:

Both a living trust and a will help the process of divvying up your estate and can each accomplish different tasks to make the entire ordeal less harrowing for your beneficiaries. However, keep in mind that a living trust and a will are not the only estate planning documents a person may need. There are several other estate planning documents which may be right for you and your goals, such as a Power of Attorney, Living Will, HIPAA Release, a property deed, and more. To create the most comprehensive estate plan which accounts for each of your wishes and goals for your estate, you should consult with an experienced estate planning attorney, who will counsel you on the best options for you and your estate.

The presence of experienced and knowledgeable attorneys is vital to the process. The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

An estate plan is an important asset that should be updated as time goes on. Ideally, your estate plan should be reviewed annually or even quarterly, although it’s acceptable to update it at least every three to five years or when there is a life event, according to Fidelity.

What qualifies as a “life event?” Things like:

  • Marriage or divorce
  • The birth of a child or grandchild
  • A purchase of a home
  • Moving out-of-state
  • A death in the family
  • Career changes
  • When you receive an inheritance or significant asset
  • And more

There are all examples of life events that should make you pause and review your current estate plan.

Any large life changes will have a direct impact on your estate plan, and sometimes for reasons you may not even be aware of. When you have an important life event, it is best to consult with your estate planning attorney for the best plan of action.

Remember, life is dynamic. Things are constantly changing. If you haven’t reviewed your estate plan in a while, it might be time to seek counsel from your attorney to make it is up to date.

What exactly is estate planning? It is twofold: (1) it is deciding what will happen to your possessions and assets and making sure that your family and friends are taken care of after you have passed away, and (2) it is ensuring that your health care and end of life care wishes are carried out if you fall ill or become incapacitated.

While most people do not want to think about death and what happens when they die, it is still important to begin planning for a time when you will no longer be around while you are still in good health both mentally and physically. After you pass away, even if you have verbally communicated to your family how you would like your estate to be administered; without a written, official estate plan in place including documents such as a Last Will and Testament and a Living Will, there are no guarantees that your estate will be dealt with in the way that you had hoped for. Establishing a solid estate plan is the only way to ensure that your estate and health care is administered according to your wishes.

First, developing a plan for how you will divide up your assets before you pass away allows you to decide what happens to your assets, instead of allowing a relative or friend (who may have their own motives or personal goals as to what will happen to your possessions) or the courts to decide how your estate is administered. When a person dies without any type of will or trust set up, all of their financial assets and property are subject to the laws of the state. This is referred to as dying “intestate,” or intestate succession. Simply put, you will have no control over who inherits what you once owned. Everything will be left up to pre-determined laws that have been set up by the state you live in.

Furthermore, when you pass away, your friends and family will already have enough of a tough time coping with the emotional burden that comes with a difficult loss. Making it easy for them to handle your estate by providing them with written documents setting out your goals and wishes for your possessions is a great gift to give your friends and family. Having everything pre-planned will give your loved ones time to grieve and reduce the stress of fairly dividing your assets according to your wishes.

Lastly, if your estate is subject to taxes, a proper estate plan can help reduce or even eliminate these taxes, allowing your family to retain most of your assets instead of handing them over to the state.

As to the right time to establish an estate plan; many would say that the right time to begin thinking about estate planning is when you become a legal adult; others could say that it is when you become a parent or guardian of a child; while some might say it is when you retire or reach a certain age. However, speaking frankly, there is no “right” time to begin thinking about estate planning, because each person and each family is different. Quite frankly, any time is a good time to begin estate planning once you become an adult, because life, as we know, is unpredictable. Any time is a good time to consider the wellbeing of your family, friends and possessions after you pass away. The important thing is that you do not wait too long to set up an estate plan. After you pass away or become incapacitated, it is too late to create a solid estate plan, and your friends and family may be left both emotionally upset by your loss and stressed, with many questions as to your wishes for your estate or health care.

When it comes to establishing an estate plan, it is most important to think about your specific goals for your estate and how you want your legacy to protected. Do you want to make sure your children have a guardian in place should you pass away or become incapacitated? Do you have multiple assets and want to ensure that your chosen beneficiaries receive your assets as directed? Do you have specific wishes for your end-of-life care should you be incapacitated? These are just some of the considerations you should make when thinking about establishing an estate plan.

If you decide to move forward with an estate plan, you will need to include a few important documents to make sure that all your bases are covered. A typical estate plan will include:

  • a Last Will and Testament that is the primary document regulating your wishes as regards inheritance and guardianship;
  • a Trust that relates to protecting assets for the benefit of yourself and/or specific persons;
  • a Living Will (also called a healthcare directive and proxy or designation of healthcare surrogate) that specifies your intent as regards decisions on your physical well-being and end-of-life arrangements respectively;
  • a Power of Attorney that enables a trusted Agent to make financial decisions for you in the event that you are incapacitated; and
  • for parents with minor children, a temporary guardianship document that names a trusted adult to care for minor children in the event of your incapacity.

Keep in mind that the specific documents you need will vary depending on your situation and your goals for your estate. A lawyer can help you clarify how to move forward with your estate plan and deal with any special circumstances you would like to consider. The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

Last Will and Testament, Living Will, Living Trust, Testamentary Trust, Power of Attorney, HIPAA Release, Quit Claim Deed, Enhanced Life Estate Deed…these are all terms we hear thrown around when thinking about establishing an estate plan. We know that as responsible adults we should plan for our future by creating a Last Will and Testament, but creating a comprehensive estate plan which accounts for the distribution of your assets, the security of your friends and family and what health care decisions should be made on your behalf involves much more than just a will.

The truth is, establishing an estate plan is rarely urgent (until it becomes urgent) and they are only needed when something awful happens. The result is that we often avoid tackling the whole mess.

However, developing a comprehensive plan for your estate can be quite simple and straightforward if you understand the basics and if you have the assistance of an experienced estate planning attorney on your side. When you are planning for what happens to your estate, it’s important to understand the difference between the different legal documents that are available to you, so you can ensure everything goes according to your plan. One of these such documents is known as a Living Will. While most people know what a Last Will and Testament is, or at least have an idea of what a Will does, many people do not know about Living Wills and how a Living Will can ensure that your wishes regarding your health care and end of life care are followed.

What is the difference between a Last Will and Testament and a Living Will, and why do you need a Living Will along with a Will?

Living Will is a binding document to specify your medical wishes if you can’t communicate because of illness or injury. With a Living Will, a person expresses what he or she would like done regarding end-of-life care. In a situation where the attending physician and another consulting physician have determined that there is no probability of recovery from a medical condition, the Living Will can direct that life prolonging treatment be withheld. The person can indicate which of the three situations where they wish for life-prolonging treatment to be withheld: persistent vegetative state, terminal condition or end-stage condition. It addresses such questions as to whether you want life extending treatment while terminally ill or in a permanent coma.

A Last Will is the fundamental piece of any estate plan. A Will functions to provide your instructions for distributing the assets you own individually or share ownership as tenants in common when you pass away. It is only in a Will that you can name legal guardians for your children, as well as someone to manage any properties left to or earned by minors. A Will also gives you the right to name an executor who will be in charge of wrapping up your estate after your death.

A Last Will does not give directives about your health care or life support. That is where a Living Will comes into play. A Living Will, also known as an advance directive or a health care directive, spells out your decisions about life support and organ donation in advance. It also names someone to manage your healthcare, commonly referred to as your Health Care Surrogate or Proxy. To avoid any conflict of interest, your Health Care Surrogate can be a different person than the person named as Agent in your Power of Attorney, who is designated to handle your financial and legal affairs.

Why have a Living Will? There are two major reasons why someone may want or need to create a Living Will.

  • A Living Will spares your family the anguish of making life-support decisions without your input. It also helps to avoid major arguments between family members at a vulnerable time. With a valid Living Will, your wishes are clearly expressed so that your loved ones do not have make an incredibly difficult decision in a time of tragedy.
  • A Living Will also gives you control of your healthcare by ensuring that your doctor understands your end-of-life wishes and treats you accordingly. If you have specific wishes regarding your health care, certain religious beliefs, or are concerned that your family or spouse may not honor your wishes, a Living Will gives you the peace of mind that your wishes for your care will be followed.

To proceed with a Living Will, we recommend that you meet with an estate planning attorney who can walk you through the important legal questions at hand. Your attorney can prepare the proper documentation for your state and help you think through potential scenarios that you might want to discuss with your physician and loved ones. There are numerous medical scenarios and procedures you or your loved ones could face. By having a Living Will drafted by an experienced attorney, you can be clear about the specific medical treatments you do or do not wish to receive.

Many people think a living will is not something they need unless they reach senior citizen age. However, this could not be further from the truth. Life is unpredictable and often uncontrollable, giving every enough reason for adults of any age to invest in a Living Will in order to protect themselves when bad fortune arises.

The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

Time for a check up

With the start of a new year just behind us, many people have been taking the time to reflect on the past year and re-prioritize their objectives as they head into 2016. For many of us, we have a goal of kicking off the new year with renewed vigor and a clear mission. We make lists and think of personal habits and business changes we want to make.

But, it’s also important to make sure your own affairs are in order. One important item to add to your 2016 list should be getting an estate plan checkup.

Everyone has an estate, and every estate needs a plan. Whether you consider yourself rich or poor, when you die you will leave behind assets. Your estate might include cash and investments, real estate, tangible personal property, or even an interest in a business.

At its most basic level, an estate plan determines how your assets will be distributed to those you leave behind when you pass away. Because of the ever-changing nature of tax laws, financial markets and the economy, an estate plan checkup is an important activity to revisit. Even if you already have an estate plan, it is imperative that you revisit that plan in order to ensure that it remains relevant under your current family and financial circumstances.

Just like an annual visit to your physician, a periodic review of your estate plan can either reinforce the fact that all is well and in order, or it can uncover the need for additional attention to return your plan to a healthy state. Keeping a keen eye on your plan will go a long way in avoiding disputes between your loved ones, as well as managing the amount of your hard-earned dollars that must go to cover federal and state estate taxes.
No matter what your net worth, a basic estate plan should include a valid will, durable power-of-attorney, health care power-of-attorney, and a living will. Some situations might also make it desirable to use a trust or series of trusts to accomplish your goals.

An estate plan check-up involves a review of the terms of all of these documents, with a particular focus on determining whether the persons you named to act in your absence remain appropriate, and whether the plan for distribution of your assets is still what you desire.

In addition to the implementation or review of your documents, your estate plan check-up should look at related issues such as the desirability of life insurance, disability insurance, or long-term care insurance, as well as the ongoing impact of pre-nuptial agreements or any other documents that affect your assets.

Estate planning is not a static event that you grudgingly do once and then forget about it. On the contrary, estate planning is a continuing process, because life is a moving target that is full of constant change, so your estate plan needs to change as your life changes. A periodic checkup will insure that all is healthy as you move into the future.

Celebrating Octobers Best Hue

October. The rest of the country might be sipping Pumpkin Spice Lattes and watching the colors change to oranges; but around here, it’s a time to THINK PINK! Pink ribbon, that is. 

According to the American Cancer Society, Breast cancer is the most common cancer among women in the United States (other than skin cancer). Nearly all of us know someone whose life has been turned upside down by a breast cancer diagnosis. The good news is that since the pink ribbon’s adoption a symbol for the breast cancer cause in 1992, awareness has skyrocketed and millions of women are surviving the disease.

What can you do to THINK PINK this October? We have two suggestions. 

First, be informed. Take the time to learn about breast cancer and early detection. The American Cancer Society website is a wellspring of information and has links so that you can consider volunteering and donating to the cause. As well, the Florida Breast Cancer Foundation has information about events specific to the Orlando area.

Second, let Breast Cancer Awareness Month serve as a reminder to all of us that sometimes bad things do happen. Despite our best efforts, sometimes the unthinkable diagnosis becomes a reality. When those moments do come, we can’t underscore enough how important it is to have an estate plan. Estate planning is not just for the wealthy. It’s for those among us who have any assets at all. It’s our opportunity to make sure our finances continue to accomplish our goals even after we pass on. It’s also a gift to the family and friends we leave behind.

This first-hand testimony from the Forbes website continues to inspire us as we serve our clients and seek to insure a smooth transition for families who are grieving. The author outlines her personal story of handling her father’s estate after he died from colon cancer. She shares that “The most unexpected financial lesson my father taught me came after he passed away. I am the executor of his estate. My dad was always a planner, but the things he did to make this process easier are amazing. I feel compelled to share them with just about everyone I know.” (To read her full, inspiring story yourself, check it out at Reader Story: What My Father’s Death Taught Me about Estate Planning.)

We realize that estate planning is never an easy topic. For one thing, it’s personal. For another, it feels a little morbid. Conversations about the details surrounding death take a lot of courage. But, they can also help avoid surprises, lead to better financial planning and promote family harmony.

DIY Online Wills Are They Really a Good Idea

Online legal document services offer an enticing bargain. Most people realize that they need an estate plan to manage their affairs if something happens to them, but having estate planning documents drafted by an experienced attorney can be expensive and time consuming. Furthermore, in times of the COVID-19 pandemic and when many people can accomplish nearly anything while in the comfort of their own homes, the idea of having your estate planning documents online is very attractive to the average person.

For these reasons, many consumers are now questioning whether it is possible to skip the attorney fees and use a low-cost website to prepare estate planning documents. The short answer is that, yes, it is possible, but it is not recommended. You could save a few bucks now, but later may end up creating an expensive and frustrating mess for your family.

Unfortunately, most people do not realize what they are getting themselves into with an online document service. This is because those online services have spent millions of dollars trying to create the impression that their services are similar to, or even equivalent to those of an attorney. They put lawyers in their commercials, hire celebrities to promote them, and tout stories of people who have successfully used their documents.

Yet, all the marketing in the world cannot erase the simple truth. Those online services are not law firms, and the people who create them typically are not lawyers. Online services cannot give legal advice. Instead, they are “document assistants” – a term that various states use to define service providers who type your information into generic form documents.

In other words, a document assistant is like a mindless typing robot who enters your information into a form, whether or not it makes sense and whether or not it is a good idea. If you are stuck or need advice, they cannot help you. If you make a huge mistake, they cannot warn you.

In fact, it would be a crime for them to warn you. It does not matter if the person working on your documents via one of these service providers is an estate planning genius. That person is simply not allowed to give legal advice. Think of it this way: a person needs a state bar license in order to give legal advice, just the same way that a doctor needs a license to write a prescription. Giving legal advice without a license is very much like selling drugs without a prescription-it is a crime.

To combat this, these companies design their generic forms so that even without legal advice, it is hard to make mistakes. That may seem like a good thing. However, the best way to make sure that your documents do not do anything wrong is to make sure they do not do or accomplish anything at all. Essentially, these documents become do-nothing, one-size-fits-all generic documents.

That leads to the next problem with the online services. These document assistants cannot even promise you that the documents will work because they are not licensed attorneys, which means they cannot promise a particular legal result.

Many clients are excited to learn that they can leave assets to a special needs child without jeopardizing government benefits; or that they can protect a child’s inheritance from frivolous lawsuits, divorce or bankruptcy. A well-designed estate plan ensures that your resources get where you want them and that they are used in the way you instruct. Estate planning is about creating legally enforceable provisions that do what you want done.

These online document services cannot promise you any of that. They cannot promise you that you will achieve your goals. They cannot point out opportunities or other options beyond what you have selected, and they cannot warn you about hidden hazards. Really, all these document services can do is save you a few bucks.

However, these document services play a clever price game, too. Most of these online services investigate what an attorney would charge for similar documents and then use that information to determine their pricing. These comparisons are misleading in a variety of ways. First, online services compare the price they charge for a single document to the price that an attorney charges for an entire estate plan, which typically includes numerous comprehensive documents.

More importantly, there is no way to compare the prices of what you get from an online document service to what you get from an attorney, because they are not offering nearly the same thing that you would get from an attorney. If a fast-food restaurant told you that you could order their $1.79 “salad in a box” instead of paying $20 for a fancy restaurant salad bar, you would instantly recognize the faulty comparison. A wilted clump of lettuce in a plastic clamshell is not anything like an all-you-can-eat salad bar with every conceivable ingredient, made fresh and eaten in a nice environment with an attentive wait staff.

Yet, most people recognize this faulty comparison because most people have experience with restaurants – both good and bad. They know how to judge quality, and they understand the “you get what you pay for” concept. But, when it comes to legal services, most people don’t have the experience to know better. If your estate plan is faulty or you do something wrong when drafting your own documents using an online service, you will never know. But, your family will know. If your estate plan doesn’t work properly, your family could end up paying the price and cleaning up the mess after you have passed away.

Your estate plan is the box that carries your entire life savings. It is just not worth the risk of damaging your life’s work just to save a few bucks.

The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

Digital Estate Planning

The two main classes of digital assets are 1) any online account that requires a username and password; or 2) any file stored in places including an individual’s computer, mobile phone, server, local DVD or CD-ROM, SD card or at online storage sites.

Online Accounts

If the client is the only person who has access to her online accounts, then what happens when she dies? Much of the concern involves the rights of the online company, which were granted when the individual initially accepted the account’s Terms of Service (TOS). Several issues to consider for online accounts requiring a username and password include the following:

  • The TOS Agreements of most popular online companies rarely, if ever, allow for the immediate or automatic transfer of the account to the personal representative.
  • Without access to a decedent’s bank and investment accounts, a trustee or executor will have difficulty obtaining necessary information for meeting the requirements of the underlying will and trust.
  • Without access to a decedent’s email, blog or website, the personal representative may not even be aware of certain ongoing obligations, especially with more transactions occurring online only.

Digital Files

Files on an individual’s computer are difficult Digital estate planning enough to find, depending on the individual’s levels of organization or disorganization. The personal representative’s job can become exponentially more difficult if the important data is stored offsite. Additionally, there are two main kinds of digital files to consider:
Client-Created Files – including scanned financial files, address books, and digital photos, but can also include valuable business documents or intellectual property.
Client-Purchased Files – including music, videos and e-books bought during the individual’s lifetime. In the typical TOS, the seller only grants the individual buyer a non-transferable license to use the work “for life.”

Steps You Can Take Now

Make a list of all digital assets. This should be a comprehensive list of all of your online accounts and data files, including email accounts, websites, hard-drives, important Word and Excel documents, online storage accounts, and social media accounts.
List wishes for each asset. For local hardware containing data files, this can include leaving the asset directly to a specified heir. For online accounts, this can include:

  • Shutting down the account
  • Doing nothing
  • Archiving contents on CD or DVD
  • Creating an auto-response on the account; and/or
  • Forwarding all messages to another place
  • Choose the person who will receive each asset
  • Provide access and control to the recipient
Why Family Members Fight Over Inheritance

People who are normally kind and in tune with their emotions revert to fighting children, figuratively, sometimes literally, scratching, punching, and pulling each other’s hair. Even where there is no obvious conflict, it seems that nearly every family has some amount of tension permeating just beneath the surface as they address family inheritance issues.

Stories of families in conflict at the death of a loved one are regular fodder in the media. It is easy to mock them; they look ridiculous, and it all seems so petty. We wonder why people just can’t get along. But, after some study I have learned that what appears as greed and pettiness are really symptoms of survivors’ struggle to feel loved and important. The fight for money and things – Dad’s golf clubs, Mom’s necklace – is not about the object or the money itself, but about what they symbolize: importance, love, security, self-esteem, connectedness, and immortality.

The old saying that “money makes people do funny things” doesn’t do justice to the real problems and root causes of family conflict. Money is not the core reason that fami¬lies fight; money is how we keep score in the fight for the intangibles of love, approval, and primordial survival. Money and possessions also help allay the fears of those left behind. When families fight, greed is rarely the principal motive.

The feuding family members can always trace their problems back several years, if not all the way back to childhood. For some, the trouble starts with the involvement of non-family. It is clear that inheritance conflict doesn’t come out of the blue; it is a continuation of long-term relationship problems that resurface upon the illness or death of a loved one. And they aren’t just about money or greed; they are about more, much more. But what is it that so often drives people to wage war against their own flesh and blood over a loved one’s estate?

There are five basic reasons why families fight in matters of inheritance:

  1. Humans are genetically predisposed to competition and conflict.
  2. Our psychological sense of self is intertwined with the approval that an inheritance represents, especially when the decedent is a parent.
  3. We are genetically hardwired to be on the lookout for exclusion, sometimes finding it when it doesn’t exist.
  4. Families fight because the death of a loved one activates the death anxieties of those left behind.
  5. One or more members of a family has a partial or full-blown personality disorder that causes them to distort and escalate natural family rivalries into personal and legal battles.

These sources of family conflict are not mutually exclusive; in most cases, some combination of the five elements present themselves in a combustible cocktail of family rivalry and conflict.

A significant number of inheritance disputes also involve testators and beneficiaries who come from dysfunctional families, are mentally ill or addicted, or suffer from one or more of the four Cluster B personality disorders as defined in the Diagnostic and Statistical Manual (DSM IV): antisocial, borderline, histrionic, or narcissistic.

Despite the tensions and rivalries that naturally exist in all families, family conflict is not inevitable. As family coun¬selors we can help families overcome the natural tensions that tend to pull them apart in order to preserve their most valuable asset: family itself. We can counsel our clients on the pitfalls of various courses of action, dissuade them from provisions that are punitive, encourage them to mend fences while family members are still alive, and promote planning that leaves a legacy of love.

More than just scriveners, clients look to their estate plan¬ning counsel to advise them on what is fair and customary. We use our legal and personal skills to document their wishes while being sensitive to the needs of those left behind. Special care must be taken to not upset long-held roles when allocating personal and financial assets and in appointing fiduciaries. We can also protect our clients from predators from within the family and without who are most likely to manipulate and abuse. In short, we can make a difference. Our clients are also good teachers, instructing us on the importance of family, the transience of money and things, and the shortness of life.

Do You Have a 401k You Need to Incorporate Into Your Estate Plan

When you meet with your Estate Planning lawyer, initially, they may ask you some of these questions: “Do you own a home?” “Do you own a business?” “Are you married?” The fact gathering necessary in an initial interview does not always allow the sort of leisurely chat friends would have over coffee. It’s important for your lawyer to gather the basics in the initial meeting, if no open ended questions are asked then assets important to your situation can be overlooked.

For example, approximately 4.2 trillion dollars is held today in 401(k) and other defined contribution plans. For public sector employees, a defined contribution plan may include a 403(b) or 457(b) plan. The amount of assets held in defined contribution plans is projected to grow in the future given that in the private sector and possibly even the public sector, a regular pension or defined benefit is going the way of the Dodo bird. While going forward employers may still provide matching or non-matching contributions to an employee’s account, the trend is clear that fewer em­ployees and retirees in the future will be able to depend on a monthly pension check.

A 2009 study by human resources consulting firm Hewitt Old 401k Estate Planning Associates (now Aon Hewitt) concluded that 29 percent of former workers leave their 401(k) with a previous employer. This amounts to a huge sum of assets held by American workers that can be overlooked if you are asked only “do you currently have a retirement account?” The same study also stated that two-thirds of employers report that the company 401(k) plan is the primary retirement savings vehicle for employees. Clearly then gathering information regarding an old 401(k) plan is an important step in assessing your unique situation.

Determining the existence of an old 401(k) becomes even more important in the context of trust administration and probate. If you are a surviving spouse or beneficiary of someone who was not the plan participant, knowledge of the 401(k) can be even more diminished.

Your lawyer will need to ask you open ended questions about your history to discover unclaimed 401(k) assets. If your old employer no longer exists because of dissolution or merger, there are other ways your lawyer can use to find that information.

Up to date beneficiary designations are critical and you should review them at a minimum upon the major life events of birth, death, marriage, and divorce. Helping discover whether any 401(k) assets are unclaimed facilities a discussion about current assets and whether those beneficiary designations are also up to date.

What Estate Planning Attorenys Really Do

Everyone seems to know that estate planning something that you should do, but they are either unaware of what crafting a complete estate plan entails beyond just having a Will drafted, or they choose to put off having their estate planning documents prepared until it is too late. It can be uncomfortable to talk about what many people mistakenly believe estate planning is all about — dying and the resultant loss of control. Or you may think that estate planning is just for the wealthy or elderly.

For example, many young, single people who do not have a lot of money or any children often believe they do not need an estate plan because they do not have much to leave to anyone, thinking that because they do not have much, they do not have an “estate.” However, this is a misconception-everyone, which rich or poor, old or young; has an estate. Creating an estate plan would help your parents pay for your funeral and burial, as well as make sure that your parents can access your assets if something happens to you, which could include your bank account, personal possessions, or life insurance policies.

A comprehensive estate plan typically also includes health care directives such as a Living Will and a HIPAA Release, which can be a great gift to your parents or guardian in ensuring that you are cared for per your wishes and that they can receive all necessary medical information to make any important decisions on your behalf.

As uncomfortable as it may be, planning for the future after we pass away is something we and our family members or friends are all going to have to deal with at some time, especially if we have heirs or a spouse that we will leave behind. You do not have to be rich or elderly to plan for your belongings and money to go to whom you choose when you pass away. An experienced estate planning attorney can help you protect your family and your assets and can also help you protect your life and your legacy.

First, what is estate planning? Estate planning is the process of creating documents that legally determine how your prized possessions will be distributed after your death, including who inherits what assets and who controls the distribution of assets.

A typical estate plan will include, but is not limited to:

  • a Last Will and Testament that is the primary document regulating your wishes as regards inheritance and guardianship;
  • a Trust that relates to protecting assets for the benefit of yourself and/or specific persons;
  • a Living Will (also called a healthcare directive and proxy or designation of healthcare surrogate) that specifies your intent as regards decisions on your physical well-being and end-of-life arrangements respectively;
  • a HIPAA Release that allows the individuals you have named as surrogates or alternates to have your medical records released to them;
  • a Power of Attorney that enables a trusted Agent to make financial decisions for you in the event that you are incapacitated;
  • a property deed, such as an Enhanced Life Estate Deed, to allow for the transfer of your property without the need for probate proceedings; and
  • for parents with minor children, a temporary guardianship document that names a trusted adult to care for minor children in the event of your incapacity.

It is easy, and even natural, for the average person to think of estate planning as a somewhat melancholy area of law, which is not necessarily untrue. Estate planning deals with the often uncomfortable and sad topic of death, which is a topic that most people avoid dealing with until it is absolutely necessary. However, estate planning is more than just talking about death and what happens after death. Here is what estate planning attorneys really do:

  • We make sure the right people care for our client when the client cannot do so themselves, such as when our clients are incapacitated or determined unable to make decisions on their own.
  • We place our clients’ wishes and personal goals for their estate as our top priority.
  • We ensure the right people care for our clients in the event that they become ill or incapacitated, and we ensure that their loved ones are cared for in the event of our client’s passing.
  • We provide our clients and their families with the peace of mind that their assets and personal possessions will be taken care of and in the right hands after they pass away.
  • We work to assure our clients that their wishes and personal goals for the administration of their estate will be followed.
  • We safeguard and make certain that our client’s legacies — monetary and moral — are passed along to the client’s loved ones.

We believe it is important to reframe how the average person thinks about estate planning. It is not solely about death and administering assets – estate planning is about protecting the legacies of our clients for years to come, and ensuring the our clients’ wishes are followed and that their loved ones are properly cared for. It is an essential mission which we do not take lightly. We are proud to serve our clients each and every day in protecting their legacy by establishing an estate plan that is comprehensive and accounts for each of our clients’ wishes.

The attorneys at The Orlando Law Group represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

Funding Your Trust

A clear plan for the transfer of assets is crucial to the success of any estate plan. But our best plans will fall far short of expectations if the trusts are never properly funded.

Here’s an analogy: If the trust is the car, the funding is the fuel. Without gas in the tank, that beautiful sedan with the precision engine is just metal on four wheels. It’s not going anywhere. The same holds true for an estate plan. Until it’s properly funded, the plan is just a plan – a plan that can’t be executed. Like the car with the needle on empty, it’s not going to take you anywhere.

With basic wills, most of the funding happens after death through the probate process. By contrast, a trust can – and really should – be funded while the trust maker is still alive. With proper trust funding, you can be assured that your designated assets will be governed by the terms of the trust agreement. Without it, assets not properly transferred to the trust will generally fall to probate.

Proper trust funding involves moving assets that are in your name and retitling or reassigning them to the trust. These assets fall under three main categories:

1.     Personal property and real property with title (home, car, boat, etc.)

2.     Non-titled property (computer, furniture, artwork, tools, etc.)

3.     Property that passes by beneficiary designation (life insurance, 401(k), etc.)

In certain instances such as incapacity, the General Durable Power of Attorney can be useful in funding a trust. This ancillary document allows the agent acting under Power of Attorney to transfer assets or update beneficiary designations. Additionally, where property remains in the individual’s name at the time of death, the Pour-Over Will can be a “last step” measure to redirect the assets into the established trust. These special instances, however, underscore the importance and the advantage of acting early to properly fund a trust. By doing so we greatly diminish the need for the Durable Power of Attorney and eliminate any need of the Pour-Over Will.

Ttrust Decanting Power to Appoint in Further Trust

Whenever an Independent Trustee may distribute assets to or for the benefit of a beneficiary, our Trustee may appoint the property subject to our Trustee’s power of distribution in trust for the benefit of one or more beneficiaries of any trust created under this instrument under the terms established by the Independent Trustee. Any trust established by the Independent Trustee and funded by the exercise of the power granted under this Section must meet these requirements:

  • The trust must not reduce any fixed income, annuity, or unitrust right provided by this trust instrument to any beneficiary.
  • The trust must provide for one or more of the beneficiaries of a trust created under this instrument.
  • The interests of remainder beneficiaries of the trust created under this instrument must not be accelerated under the terms of the new trust.

We request the Independent Trustee consider including a provision in the new trust that permits our Trustee to distribute as much of the trust principal to the beneficiary of the trust as an Independent Trustee advises so that the beneficiary’s estate can utilize the basis increase allowed under Internal Revenue Code Section 1014 after the beneficiary’s death without causing an increase in the federal estate tax.

An Independent Trustee may not use the powers granted under this Section to extend the term of the new trust beyond the period of perpetuities provided under the governing law of this instrument.

Any trust created under this provision must not contain any provision that, if applicable, would cause the trust to fail to qualify for the marital deduction or charitable deduction, fail to qualify any gift to the trust for any gift, estate, or generation-skipping transfer annual exclusion, or disqualify the trust as a qualified subchapter S corporation shareholder.

If any beneficiary holds a presently exercisable right to withdraw property from this trust, that right may not be defeated by the exercise of the Independent Trustee’s powers granted under this Section.

The Independent Trustee’s powers granted under this Section are not diminished by the revocability or subsequent irrevocability of the trust created under this trust.

Who should be your successor trustee

If you have a revocable living trust, you probably named yourself as trustee so you can continue to manage your own financial affairs. But eventually someone will need to step in for you when you are no longer able to act due to incapacity or after your death. Because successor trustees have a lot of responsibility, they should be chosen carefully.

If you become incapacitated, your successor will step in and take full control of your finances for you—paying bills, making financial decisions, even selling or refinancing assets. Your successor will be able to do anything you could with your trust assets, as long as it does not conflict with the instructions in your trust document and does not breach fiduciary duty.

After you die, your successor acts just like an executor would—takes an inventory of your assets, pays your final bills, sells assets if necessary, has your final tax returns prepared, and distributes your assets according to the instructions in your trust.

Your successor trustee will be acting without court supervision, which is why your affairs can be handled privately and efficiently—and probably one of the reasons you have a living trust in the first place. But this also means it will be up to your successor to get things started and keep them moving along. It isn’t necessary for this person to know exactly what to do and when because your attorney, CPA, and other advisors can help guide him or her, but it is important that you name someone who is responsible and conscientious.

Successor trustees can be your adult children, other relatives, a trusted friend and or a corporate trustee (bank trust department or trust company). If you choose an individual, you should name more than one in case your first choice is unable to act. They should be people you know and trust, people whose judgment you respect and who will also respect your wishes.

When choosing a successor, keep in mind the type and amount of assets in your trust and the complexity of the provisions in your trust document. For example, if you plan to keep assets in your trust after you die for your beneficiaries, your successor would have more responsibilities for a longer period of time than if your assets will be distributed all at once.

Also, keep in mind the qualifications of your candidates. Consider personalities, financial or business experience, and time available due to their own family or career demands. Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense.

Be sure to ask the people you are considering if they would want this responsibility. Don’t put them on the spot and just assume they want to do this. Finally, trustees should be paid for this work; your trust document should provide for fair and reasonable compensation.

How Do Parents Keep Control Irrevocable Trusts

When it comes to the division of their assets to their children, many parents want to be in complete control. One way to accomplish this is through the creation of a trust, which is a formal arrangement made with a trusted person, or trustee, which conveys property as directed by the creator(s) of the trust, or the trustor.

However, certain trusts must be irrevocable for estate tax and asset protection planning purposes. An irrevocable trust, just as it sounds, refers to any trust where the grantor cannot change or end the trust after its creation. Many people get turned off when the word “irrevocable” is raised, as they are unable to change or revoke the trust after it has been created. However, very often, a parent or grandparent will create an irrevocable trust for the benefit of a child or grandchild. There are several benefits to this, and several ways that an irrevocable trust allows parents to maintain control over the division of their assets to their children.

Magic Formula. The goal of planning is to “own nothing and control everything.” The magic formula is “control.” “Own” looks and sounds like an English word, but it is not. It is a legally defined concept. By contrast, “control” is what it seems to be. To paraphrase U.S. Supreme Court Justice Potter Stewart, you know it (control) when you see it.

Children’s Trust. How can parents maintain control of how their assets are divided, especially if they have multiple assets and/or multiple children? The first element of any estate planning for this purpose is a children’s trust. A properly structured children’s trust will give parents continuing control over the administration of their estate.

Choosing the Right Trustee. As with any trust, your decision as to who you will name as trustee is incredibly important, as they will maintain a significant degree of control over the trust and its assets after you have passed away. You will want to make sure that you take the necessary time to consider who is the best choice to serve as trustee, and you will need to ensure that the person you select is trustworthy, reliable, and willing and able to perform the duties required of them as set in the trust.

The best trustee is often the clients’ own parents, but it can also be one of your children. One positive of this is that your children will often be motivated to follow their parents’ wishes for fear of getting disinherited, ensuring that you maintain control over how your trustee performs their duties.

Trustee Removal Power. The parents must maintain the right to remove the trustee and name a new one. Rev. Rul. 95-58 provides that such a power does not result in estate tax inclusion if the new trustee is not “related or subordinate” as defined in IRC §672(c).

State Law. Section 411 of the Uniform Trust Code allows the settlor and all beneficiaries to petition the court to modify an irrevocable trust. Clients typically do not want to go to court, nor do they want to rely on getting cooperation from their children. However, again, children may cooperate if they know that the alternative is disinheritance. California has gone beyond the Uniform Trust Code: the settlor and all beneficiaries can modify an irrevocable trust without going to court.

Protectors. The broadest method to allow the parents to change an irrevocable trust is to name one or more protectors. Only a few states have codified provisions regarding Protectors, e.g., NRS 163.5547. Protector powers are limited only by your imagination, but generally include the power to change the allocations among the children and to change the manner of distribution. We often tell clients to not tell someone that they are named as a Protector until they need that person to act. In that situation, they should then float a trial balloon: “What would you think if I wanted to allocate 70% of the children’s trust to my daughter Sally, and only 30% to my son Jimmy?” Depending upon the Protector’s response, the parents will know whether to inform the respondent of his or her capacity as a Protector (or to move on to the next named Protector).

Single Member LLCs. Clients love the idea that they can continue to make 100% of the investment decisions. The single member LLC – with the irrevocable trust as the member and the parents as the non-member managers – is a terrific structure to provide both flexibility and control. Also, this makes it easier for the trustee, who may not want to be involved in picking stocks and bonds.

Miscellaneous. There are many structures that can help the parents keep control, both while they are alive, and even after they have passed away. Be prepared to discuss (i) private trust companies; (ii) grantor trust flip switches; (iii) powers of appointment; (iv) decanting powers; (v) trustee’s powers to terminate the trust and change it due to changes in the law; (vi) distribution advisors; (vii) selling assets from one trust to another; (viii) T-CLATs; (ix) charitable foundations; and (x) extended distribution clauses.

The attorneys at The Orlando Law Group can assist you in selecting the best structure for your trust, which will ensure that your wishes are followed and that your children or grandchildren are cared for after your passing. We represent and prepare estate planning documents for individuals throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.

If you are dealing with an estate planning issue or are looking to establish your own estate plan, please reach out to our office at 407-512-4394, fill out our online contact form.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

When Should You Tell Your Children About Their Inheritance

Not many parents like to talk to their children about their wealth. How much money people have is usually considered a private matter, something it’s not polite to talk about. But not talking to your children about how much they may inherit can leave them unprepared to handle even a modest amount.

This is becoming especially important because children of baby boomers are due to inherit more wealth than ever before. It has been estimated that baby boomers will inherit $12 trillion from their parents, and they will leave an additional $30 trillion to their own children over the next 30 to 40 years.

Many who have substantial wealth are concerned that letting their children know how much they have will take away any motivation for the children to be productive and involved citizens. If a child knows he is going to inherit millions some day, he might just be a beach bum on Maui and wait for Mom and Dad to die. Wealthy parents often want their children to learn how to live in the world as “normal” people, to be productive and successful in their own right, and may be reluctant to let their children know how wealthy they are so their children don’t start to think they are better than others.

Even those who are not as wealthy may not want to let their children know how much they have. They may be concerned that all of their savings will be needed for retirement, medical expenses and end-of-life expenses. If that turns out to be the case, their kids would not receive an inheritance they may have been counting on.

But not knowing what they may inherit leaves children in the dark and can actually hinder their ability to handle money wisely. Those who inherit a substantial amount may be unprepared for what to do with that much money. Many find they suddenly feel separated from their friends, isolated, even confused about how to handle relationships; some will be wasteful and lazy. Those who inherit even a modest amount are likely to be just as irresponsible; stories of inheritances being squandered on an expensive sports car, lavish vacations and fast living are all too common.

Experts agree that it is important to talk to your children about money and wealth, at least in generalities. You don’t need to show them bank and financial statements. Instead of concentrating on money and material things, you can talk to them about your values, the opportunities money can provide and what you want to accomplish with it. Most parents want their children to think about others, and many want to encourage entrepreneurship. Some give their children a small amount of money at a young age, and teach them how to save and invest, give a certain amount to charity, and spend wisely.

But the most effective way to teach your children about your views on money and your values is to be an example and model. Let them see you using your money in ways that reinforce your values toward it. Many parents show how they value family relationships by spending their money on family vacations or buying a second home where the entire family can gather for summers and holidays. If your children see you being charitable and helping others, chances are they will become charitable, too. If they see you comparison shopping and looking for value, they will likely not be wasteful with their own money…or with yours when they inherit it.

Estate Planning When You Are Single

These days, more people are living single than ever before. In 1970, just about one- third of Americans 15 and older were single, according to U.S. census data. Today, that number’s closer to 50 percent.

Whether never married, divorced or widowed, singles need to pay just as much attention to their estate planning as married folks, as highlighted in a recent Wall Street Journal article. Single people face unique estate planning issues that require advanced planning, time and the help of an experienced professional.

Some of the most complicated estate planning issues for singles include:

Heirs: When married people die without a will, their assets typically pass to their spouse. But what about single people? Assets are usually distributed along bloodlines, so children (if any), followed by parents, siblings or other relatives, would be the default heirs. If a single person has no living relatives, his or her assets might wind up with the state.

To ensure their assets wind up with the relatives, loved ones and charitable organizations that they’d prefer, single people should create a will and/or an irrevocable trust that specifically states how they’d like their assets to be distributed.

Decision makers: A health event or other incident could leave any of us incapacitated. For single people, it’s important to designate a trusted loved one or friend to manage assets and health care decisions in case of an emergency. Without proper directives, those decisions could fall to distant relatives or state-appointed strangers.

Single people should sign a general power of attorney, an advance health care directive, and a HIPAA authorization allowing a loved one of choice to make financial and medical decisions on their behalf.

Beneficiaries: Certain accounts, like retirement plans, require account holders to designate a beneficiary when they enroll. That beneficiary designation is typically upheld when the account holder dies, even if he or she gave the account to someone else in a will.

Previously married or widowed singles should reevaluate all of their beneficiary designations to ensure accounts won’t be given to former spouses if that’s against their wishes.

Those are just a few of the ways estate planning can be complicated for singles. It’s wise for single people to contact an estate planning professional as soon as possible, in order to make sure all their bases are covered and their assets are distributed according to their wishes.

The Supreme Court recently refused to hear appeals from states whose same-sex marriage bans had been struck down by the U.S. Circuit Courts. As a result, same-sex marriage is now legal in several states where it had previously been banned, either by state statute or by state constitutional amendment. (There are some exceptions. Idaho, for example, has a last-minute appeal pending.)

When it comes to estate planning, what does this mean? Essentially, same-sex couples now have legal rights they previously lacked, and in some cases, they’ll need to take steps to properly leverage those rights.

Here are just a few examples:

  • States that impose a state estate tax must now extend the state marital deduction to same-sex spouses.
  • Same-sex married couples must now be allowed to file joint state income tax returns.
  • States will have to extend survivorship rights to same-sex spouses when it comes to retirement plans, life insurance policies, financial accounts and other forms of property.
  • If one spouse becomes disabled, the remaining spouse will be recognized as the disabled person’s preferred medical decision maker. Similarly, if one spouse dies without an estate plan in place, default laws of descent and distribution—that is, the rules that govern which parties make decisions and ultimately receive the deceased’s property—must now account for a same-gendered spouse. However, without an enforceable estate plan in place, the estate will often end up in the probate court. Court fights may ensue, especially in families where the surviving same-sex spouse is estranged from his or her other family members.

Proactive estate planning is essential for all couples, and same-sex spouses are no exception. For any couples who have benefited from the recent news from the Supreme Court, it’s a good idea to meet with a local estate planner to learn about new benefits and potential challenges.

Avoiding the New Income Taxes Trusts and Estates

The Importance of Trust and Estate Taxes Today

The trust is recognized as a separate taxable entity for federal income tax purposes and is governed by rules similar to that of individuals. It is an arrangement whereby a trustee is appointed to manage property for the benefit of beneficiaries. The estate or trust must file a return on Form 1041 if it has gross income of $600 or more. An estate or trust is generally regarded as a conduit with respect to its income and is allowed a deduction for the portion of income that is currently distributable or distributed to the beneficiaries. The income allocated to a beneficiary is taxed in the beneficiary’s hands and retains the same character that it had in the estate or trust.

The New Tax Law’s Impact on Trusts and Estates Income Taxes

The American Taxpayer Relief Act of 2012 (“ATRA”) raised tax rates on individuals, estates and trusts. The maximum bracket increased from 35% to 39.6%. The capital gains bracket increased from 15% to 20%. For individuals, the maximum brackets are effective once taxable income exceeds $400,000 for an individual, and $450,000 for taxpayers married filing jointly. The threshold for head of household is $425,000 and for married couples filing separately $225,000.30.

The income tax rates for trusts and estates are extremely condensed. Once the estate or trust has taxable income in excess of $11,950 the maximum brackets of 39.6% for ordinary income and 20% for long-term capital gains applies. In addition, the 2010 health care law ushered in a complex new Medicare contribution tax of 3.8% on Net Investment Income (“NII”) in excess of certain thresholds.

Planning Options to Consider

Avoid condensed trust and estate brackets, utilize the beneficiary’s lower tax brackets and avoid the 3.8% surtax. By utilizing the beneficiary’s income tax brackets there may be an opportunity to not only avoid the 3.8% surtax, but to take advantage of the beneficiary’s lower tax brackets.

The key to achieving these results is to effectively utilize the special deduction available to estates and trusts for distributions to the beneficiary. Due to the fact that the estate and trust operate as a conduit, by distributing the income, including NII, to the lower bracket beneficiary substantial tax savings may result.

There are many unique aspects of trust and estate income taxation which will help lower the respective income taxes. Executors and trustees must adhere to fiduciary standards and owe duties of care and loyalty to all beneficiaries and participants in the estate and trust. Therefore, fiduciaries must be knowledgeable about the individual beneficiary circumstances as well as the overall structure of the entity. Drafting for suitable discretion will help the fiduciary better manage these considerations. Fiduciaries must carefully document the factors which they are considering and make their decisions accordingly.