Don't Confuse Me With The Facts: 4 Myths Of Estate Planning

When faced with an uncomfortable situation or decision, it is human nature to make excuses or convince ourselves of untruths rather than deal with the inevitable head-on. This is no different when it comes to estate planning.

Estate planning can certainly seem like a daunting and depressing subject as we face our own mortality. However, creating an estate plan does not mean you are going to die now - it just means that you have prepared for the future. A recent article in Forbes debunks four persistent myths of estate planning that are often used as excuses to avoid the planning process altogether. These myths include:

  1. Estate planning is only for the wealthy. False. Anyone who has assets, owns property, or supports loved ones needs an estate plan.

  2. Estate planning only involves asset distribution after death. False. An estate plan can also be used to protect your assets while you are alive, protect assets for your loved ones after your death, designate a guardian for minor children, express your wishes for financial management and medical care in the event of your incapacity, manage tax exposure, and avoid the probate process.

  3. All assets will be distributed through a will. False. Some assets may transfer through other means such as beneficiary, payable-on-death (POD), and transfer-on-death (TOD) designations.

  4. An estate plan does not need to be updated once in place. False. Estate plans should be revisited over time to account for changes in the law and any major life events such as divorce, death of a family member, or acquisition of property.

The truth of the matter is that estate planning really is for everyone. While individual needs may vary depending on life situation and assets owned, an estate plan is an invaluable tool for protecting yourself, your assets, and your loved ones. As with any of life’s challenges, running away from the estate planning process may seem easier now, but it is a race you will never win.

I Did My Own Taxes, Can I Do My Own Estate Plan?

You conquered your own tax return this year, and if you are lucky, you are anxiously awaiting your refund. Much like online tax preparation services, there are numerous DIY services available to those interested in tackling their own estate plan. If you are mulling over your estate plan, you may be wondering if those DIY websites are worth a shot.

While online estate planning services can sometimes save time and money, the quality, personalization, and clarity of the end product some of these services offer may not always be sufficient to protect your loved ones from headaches after you pass away. The decision to establish an estate plan through an attorney or through an online legal service depends on numerous factors including the type and size of assets you own, familial complexities, and budget. An article recently published in Forbes provides some points of consideration if you are weighing the pros and cons of DIY estate planning.

While there is not necessarily a right or wrong answer as to how you should go about establishing your estate plan, making sure you get an estate plan in place sooner rather than later is always a good idea.

To Trust, Or Not To Trust...

…that is the age-old question! In life, we learn from Shakespeare, “Love all, trust a few, do wrong to none.” But when it comes to managing your assets, is a trust really a good idea? The predictable answer: It depends. While there can be many benefits to establishing a trust, a trust may not always be necessary to accomplish one’s estate planning goals.

A recent piece in Forbes highlights the most compelling reasons why some individuals choose to put their assets into a trust. Some of these reasons include avoiding probate, protecting children or loved ones, and reducing estate taxes. Two different types of living trusts, revocable and irrevocable, can be utilized to accomplish different goals.

Alternatively, there may be other ways to achieve your estate planning goals without a living trust. For example, there are measures you can take to avoid probate without a trust such as setting up assets to transfer automatically upon your death. Assets that are held jointly with another person or that have beneficiaries or transfer/pay on death designees can be passed to loved ones outside of the probate process. Further, a testamentary trust can be written into a will to protect assets upon your death for the benefit of your children or loved ones. This type of trust would only come into existence upon your death. Additionally, Indiana and Ohio do not collect estate taxes, and the federal estate tax exemption is set at $11.4 million per person for 2019. As such, generally only very wealthy individuals in Indiana and Ohio will benefit from an irrevocable trust for the purpose of addressing estate tax concerns.

The decision to establish a trust can be complicated, but it should ultimately be based upon your personal estate planning goals.

Roses Are Red, Violets Are Blue, Getting Married? Here's What To Do...

If you are newly engaged or married, updating your estate plan is an important part of establishing your new life together with your spouse. Below are a few estate planning considerations for newlyweds:

  1. Beneficiaries: After getting married, you may wish to update your beneficiary designations on retirement accounts, brokerage accounts, and life insurance polices to include your new spouse.

  2. Property Titles: If you own real property or a vehicle prior to your marriage, you may choose to update your title to add your spouse as a joint titleholder.

  3. Wills: You will likely wish to account for your new spouse as a beneficiary in your will. Additionally, if you plan to have children, you can utilize your will to choose a guardian and make a plan for passing assets to your children.

  4. Powers of Attorney: Spouses typically designate each other as primary agents for purposes of making financial and medical decisions in the event of incapacitation.

Show your new spouse some love by planning for the future.

New Year Estate Tax Exemption

For 2019, the IRS has announced that the lifetime estate and gift tax exemption amount has increased to $11.4 per person, or $22.8 million for a married couple. This means that an individual may pass $11.4 million in assets without facing federal estate taxes. Married couples may still pass assets to each other upon the death of one spouse free of federal estate taxes. The surviving spouse may then elect to utilize the deceased spouse’s exemption amount (called “portability”) which would allow the surviving spouse to pass up to $22.8 million in assets free of federal estate taxes.

The annual gift exclusion amount remains at $15,000 for 2019. This means that each individual can gift up to $15,000 to an unlimited number of individual recipients without cutting into their $11.4 million individual lifetime estate and gift tax exemption allowance .

Check out this 2019 estate tax update from Forbes for more information on 2019 estate taxes.

Make A Quick List, Check It Twice

Wondering where to start as you consider creating an estate plan? Thinking through this short and sweet checklist will give you a solid foundation for your estate plan:

  • Beneficiaries: Who will get your assets when you pass away? Friends, family, charities?

  • Specific Gifts: Do you have any special items such as family heirlooms or jewelry that you would like certain individuals to receive after you pass away?

  • Trustee: Who will manage assets on behalf of your children if you pass away while they are young?

  • Executor: Who do you trust to distribute your assets as you have spelled out in your will?

  • Financial Representative (POA): Who should make decisions regarding your finances and other personal business if you become incapacitated?

  • Health Care Representative (POA): Who should make medical decisions on your behalf if you become incapacitated?

  • Living Will: If you are in a terminal state as determined by a physician and unable to make decisions on your own, would you like to receive life-prolonging care, or would you prefer to receive comfort care only?

Best wishes for a safe and happy holiday season to you and your family!

Holiday Conversation Starters

Looking for some reading material to pass the time as you travel this holiday season? Kiplinger’s comprehensive guide to estate planning provides a solid base of information for those thinking about creating or updating an estate plan. Consider discussing some key topics from Kiplinger’s guide with family and friends over the coming months:

  • Does your existing estate plan still makes sense given your present situation in life and the current climate of estate tax law?

  • Should you utilize a trust to handle asset distribution, protect your privacy, or avoid the probate process?

  • What type of information could you share with your family members regarding your estate plan to ease tension and establish expectations?

  • How should your assets be divided (equally or unequally) among your loved ones and when should those distributions be made?

  • Should you make lifetime gifts to decrease the amount of assets you hold at the time of your death and to take advantage of the annual gift tax exemption?

Safe travels, and happy planning!

Celebrating 5 Years In Business!

Five years have flown by! As always, thank you to my family, friends, and clients for your continued support in building this business. Over the past five years, I have had the opportunity to assist over 350 individuals with their estate planning needs. Meeting so many wonderful people and working together to develop custom, affordable estate plans has been an incredibly fulfilling and rewarding experience.

Even more importantly, our family has been blessed with three beautiful children over the last five years. Many of you know that the past year has been incredibly difficult for our family after the birth of our third child, our second with special needs. I will be forever grateful to my clients for your kind words, prayers, and flexibility this year as we have managed our child’s medical needs. Your compassion during this time is appreciated beyond measure. To those closest to us who stand behind us daily, your unwavering support is everything - thank you.