Avoiding probate is a common goal for those establishing estate plans. The probate process is the system through which assets in a deceased person’s estate are distributed according to wishes expressed in the decedent’s will, or through state intestacy laws if no will was created. The transfer of assets through a probate court can result in fees and delays that many hope to avoid. Assets that do not transfer automatically upon an individual’s death are included in that individual’s estate. As such, setting up assets to transfer automatically upon death can reduce or even eliminate an estate, thus minimizing costs and complexities associated with the probate process. Below are some helpful tips shared in this piece from Forbes highlighting some of the best ways to utilize an estate plan to avoid probate:

1. Payable-on-Death Designation: Designating beneficiaries on life insurance policies, retirement, investment, and other accounts, as well as payable-on-death beneficiaries on checking and savings accounts can ensure the non-probate transfer of financial assets.

2. Transfer-on-Death: Indiana and Ohio both allow individuals to set up transfer-on-death beneficiaries on titles to real estate and vehicles. Upon the original owner’s death, the transfer-on-death beneficiary will receive such property outside of the probate process.

3. Joint Ownership: By adding a joint owner to property or financial accounts, assets belonging to the original owner can become the property of the joint owner seamlessly upon the original owner’s death without the involvement of the probate court.

4. Revocable Living Trust: Some individuals place their assets into a revocable living trust during life. Upon the death of the grantor (the person who created the trust), assets that have been transferred into the trust will pass to beneficiaries according to the terms of the trust without going through probate.

5. Gifts: Finally, you can reduce the size of your estate by making gifts during your lifetime that you would have otherwise made through a will after your death. A smaller estate can result in lower probate court fees and a more timely distribution of your assets after your death.

Although assets passing through the probate process will eventually be distributed according to your will or state intestacy laws if you do not have a will, taking a few fairly simple steps now to ensure that your assets will transfer outside of the probate process can save time, money, and energy for loved ones down the road.

So, you are all set - you have made the hard decisions, you have finalized your will, living will, powers of attorney, and other estate planning documents.....but do you remember where you put them? A lost estate plan is as effective as no estate plan at all. Unfortunately, lost estate plans are all too common and can lead to big headaches for your loved ones down the road. 

A vital part of the estate planning process is storing your documents in a safe place and making sure your loved ones know where to find them. Where should you store your estate planning documents? While any safe place will do, below are a few good options:

• A fireproof safe in your home. Make sure your family and/or executor knows how to access the documents.

• A safe deposit box. Again, make sure family members or appointed agents have full access to the safe deposit box.

• Your lawyer's office. Some attorneys will store wills on behalf of their clients. Make sure your loved ones know how to get in touch with your lawyer to access your documents.

• Your local probate court. By filing your will with your local probate court prior to your death, if such advance-filing is available, you can eliminate the risk of losing your will.

• Your doctor's office. Providing copies of your health care power of attorney and living will to your doctor's office can save your loved ones time and energy needed to search for these documents when they become necessary.

It is also a good idea to store a list of your bank accounts, contact information for your financial planner and attorney, information regarding your email and social media accounts, and all passwords in a safe place that can be accessed by your loved ones in the event of your incapacity or death. As always, the best way to ensure proper execution of your estate plan is to plan ahead and communicate with your loved ones as to where your estate plan can be found.

If you are a newlywed or recently engaged, updating your estate plan will be 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. Even if you add your spouse as a beneficiary in your will, any previously-designated beneficiary designations made on these types of accounts will trump designations made in your will.

2. Property Titles: If you owned real property or a vehicle prior to your marriage, you may choose to update your title to add your spouse as a joint titleholder. This can make transfer of title easier and keep these assets out of probate if you pass away before your spouse.

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. It is a good idea to think about who you would trust to make these decisions in the event that something happens to both of you.

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

While married U.S. citizens can gift unlimited amounts of money to each other during life and after death, gifts outside of the marriage, such as those to children or other family members, may result in tax consequences if they exceed specific amounts. Though subject to change if new legislation is enacted, the below items highlight the landscape of federal gift and estate tax law as of January 1, 2024:

• The lifetime exclusion amount for federal gift and estate taxes for the year 2024 increases to $13,610,000 per person, or $27,220,000 for a U.S. married couple. Unless new legislation is enacted before January 1, 2026, these amounts are expected to decrease to around $7,000,000 per person, or around $14,000,000 for a U.S. married couple, on that date when the sunset provision of the 2017 Tax Cuts and Jobs Act takes effect.

• The federal lifetime exclusion amount remains “portable,” meaning an individual’s unused exclusion amount transfers to his or her surviving spouse if the proper election is made on the decedent’s estate tax return. This election must be made within five years of the deceased spouse’s death.

• The annual federal gift exclusion amount increases by $1,000 per person for the year 2024 up to $18,000 per person, or $36,000 for a married couple.

• The highest federal estate tax, gift tax, and GST tax rate remains stable at 40%.

See this piece from JD Supra for more extensive discussion of current federal gift and estate tax law. Happy New Year!

Are you one of the 33% of Americans who have an estate plan? That’s right, only 33% of all Americans have left direction as to where their assets should go after they pass away. 

Estate planning really IS for everyone.  Although thinking about death and what will happen to our things once we are gone is not something we love to do, science has proven that 100% of us will die at some point. If you leave no plan for your family, you may not be harmed, but your loved ones will be left with the burden of figuring out your affairs while trudging through a costly and hectic probate process.

Without an estate plan, you give a court permission to decide who gets your assets and who will raise your children. If a court decided to divide your assets amongst your family members, would you trust all of your family members to handle these gifts responsibly? A trust can help in this situation, as a trust allows you to dictate how assets can be used to make sure untrustworthy or financially irresponsible loved ones do not mishandle their newly-acquired assets. Do your loved ones know where to find your assets? It is important to make sure this information is available and accessible to your loved ones to prevent a wild goose chase after you pass away.

What about real estate – do you own valuable real estate that you hope to pass down through your family? Or let’s say you own valuable or cherished personal property such as antique furniture or family heirlooms. Family turmoil often results from a failure to designate specific beneficiaries for meaningful personal property.

Furthermore, who are the beneficiaries on your retirement and other financial accounts? Are these beneficiary designations up to date?  If you have gone through a divorce, have you removed your former spouse as a beneficiary? If not, your former spouse will still receive these assets even if he or she has no other rights to your other assets by virtue of the divorce.

In addition to distributing your assets, your estate plan will nominate individuals to make medical and financial decisions on your behalf if you become incapable of doing so. This process can become very tricky and stressful for your loved ones if you fail to appoint power of attorney.

For many reasons outlined in this recent piece from USA Today, dying without an estate plan can be disastrous for those you leave behind. Establishing a basic estate plan is one of the greatest gifts that we can all give our loved ones.

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!

I am very excited to celebrate one decade in business this week! It is hard to believe that it has been ten years since I nervously launched my website and wondered if this venture would ever go anywhere. Since then, my husband, Brian, and I have welcomed three beautiful children and my business has grown from serving 60 clients in its first year to serving nearly 300 clients annually.

While I have many people to thank for helping to build my business, there is no one who deserves more credit than Brian for encouraging me every step of the way, helping me through struggles, and adjusting his free time to my work schedule. I am also very fortunate to have my dad, a fellow attorney, as a wonderful mentor, my mom as my always-willing sounding board, and my sweet daughters and son as my biggest cheerleaders and loudest background noise.

There are a number of individuals in the South Bend business community who have helped me from startup until today, and there is no way I could ever thank you all enough for your overwhelming support. To all of my friends, family, and clients who have passed my name along to others, provided moral support, or sent touching messages of gratitude, I am so thankful for all of you. I feel very lucky to have the opportunity to serve in this community that means so much to me.

Here's to the next decade!

The phrase “better together” takes on new meaning when it comes to estate planning for married couples. Spousal coordination and a shared understanding of financial and legal matters are essential to the successful execution of an estate plan.

This piece from Forbes provides helpful considerations for spouses working through an estate plan, as well as tips to ease the financial and legal burdens on a surviving spouse once the first spouse passes away. Four key takeaways from this article highlight the biggest mistakes married couples make from an estate planning perspective:

1. Lack of shared knowledge of financial assets and legal documents. Oftentimes, one spouse manages financial and legal matters, which can leave the other spouse feeling overwhelmed and lost when the managing spouse passes away. Both spouses should know where financial and legal documents are located so they can be easily accessed upon the death of one spouse. It is also important to keep a joint account with funds for emergency expenses and funeral costs that both spouses know how to access.

2. Individually-held accounts that do not name the spouse as beneficiary. Assets that do not transfer automatically through a beneficiary designation will pass through the probate court. This often means the surviving spouse will incur expenses that could have been avoided by utilizing beneficiary appointments or payable on death designations.

3. Failure to fund a trust that has been created. While a trust can be a very useful tool, trust language only applies to assets that have been titled in the name of the trust. Unfortunately, many neglect to actually place their assets into the trust, rendering the distributions spelled out in the trust ineffective.

4. Improper coordination of assets outside of a trust. Beneficiary designations made on retirement accounts, life insurance policies, and the like often conflict with distributions laid out in a subsequently-created estate plan. As such, assets that one might intend to pass through a trust or other estate planning tool will instead pass according to the previously-made beneficiary appointments. Whether or not a trust is utilized, it is always important to double check beneficiary designations to ensure proper coordination with an estate plan.

As with most marital matters, communication is the foundation for a solid estate plan.

A home is typically the largest non-financial asset owned by Americans at the time of death. As such, the transfer of one’s home is often a major consideration during the estate planning process. If you do not know where the deed to your home is located, not to worry! Possession of a deed is not equivalent to proof of ownership of real estate. Your county recorder stores images of all deeds and other recorded documents in historical records. Only the recording of a real estate transaction with your local real estate records office is sufficient to change how title is held on real estate. Such documents are publicly available to provide proof of ownership.

Whether the goal is to avoid probate, minimize capital gains, or attempt to qualify for Medicaid, there are several ways a home can be transferred through an estate plan. If you have been in your home for a number of years, the value of your home has likely appreciated markedly since the time of purchase. Therefore, simply gifting your home to a loved one during your lifetime could have significant capital gains tax implications. So, what are some effective ways to plan for the transfer of your home while minimizing capital gains? Below are a few options:

1. Transfer on Death Deed: In some states known as a Lady Bird deed, a transfer on death (TOD) deed allows the original homeowner to maintain full control and possession of the property during his or her lifetime. Upon the death of the original homeowner, the home will transfer to the named beneficiaries without probate court involvement. The TOD beneficiaries will also enjoy a stepped-up basis, which is advantageous from a tax standpoint. A TOD deed is a fairly inexpensive, simple way to keep your home out of the probate process.

2. Living Trust: By transferring a home into a living trust, a homeowner is able to transfer his or her real estate to a beneficiary or beneficiaries named in said trust without the involvement of a probate court. Real estate in a living trust will not be included in the original homeowner’s estate, meaning the real estate will pass outside of the probate process, saving time and money for those left behind. Upon the death of the original homeowner, a home that has been placed in a trust can be sold and proceeds distributed to loved ones with the benefit of a stepped-up basis for capital gains considerations.

3. Life Estate: By transferring property to a beneficiary during life while reserving a life estate in a home, the original homeowner maintains the right to live in the home during his or her lifetime. Upon the original homeowner’s death, the home transfers (with a stepped-up basis) to the named beneficiary. With a life estate, it is important to keep in mind that the original homeowner must give up many ownership rights to the property, including the ability to mortgage or sell the home, during his or her lifetime.

After considering all factor and options, an estate plan can be a very useful tool for arranging the transfer of a home. For more information, take a look at this recent article by Forbes.

This week, I had the wonderful opportunity to present to Indiana and Ohio members of the American Association of Daily Money Managers on the topic of estate planning. I shared some of the most common challenges and points of confusion that I encounter when helping clients establish estate plans. These items include the power of beneficiary designations, avoiding probate, Medicaid planning concerns, and unpleasant thoughts and difficult conversations associated with estate planning.

The power of beneficiary designations.

One thing that many clients are surprised to hear is that a beneficiary designation on a retirement or other financial account will override anything written in a will. Distributions to listed beneficiaries on financial, real estate, or other assets happen first, then a will catches any assets left over that are otherwise not in a trust. This goes hand in hand with confusion regarding ways to avoid probate.

Avoiding probate.

Many times, when I ask a client to share any goals they may have in mind before we get started planning, the client will tell me that they want a trust because a friend or financial planner has told them they should have a trust. However, the client does not often know why they might need a trust. After further discussion, I typically find that the concern is to avoid probate. Thereafter, I discuss the option to utilize beneficiaries and transfer on death designations on financial assets, real estate, and vehicles before delving into discussion of a trust. Additionally, there is often a misunderstanding that wills and trusts are mutually exclusive. Wills are still utilized even when a trust is established. When an individual sets up a trust, a pour-over will is used to ensure that any assets not placed into the trust during the trust creator’s life, whether accidentally or purposely, are “poured” into the trust at his or her death to be distributed according to the terms of the trust.

Medicaid planning concerns.

Medicaid planning is also an area of much confusion. Generally speaking, an individual hoping to qualify for Medicaid in the future will need to give up ownership and control of any assets that he or she wishes to protect. This can have drastic consequences that should not be taken lightly. Additionally, married couples often fear that they will lose their homes if one spouse enters a nursing home. Many are relieved to find out that the “healthy” spouse will be able to stay in the couple’s primary residence without fear of losing the home.

Unpleasant thoughts and difficult conversations.

Estate planning is not the most pleasant topic. Planning usually involves uncomfortable discussions, particularly between parents and children. Uncomfortable though these conversations may be, making a plan provides peace of mind not only for the creator, but for his or her loved ones who will not have to make guesses and clean up a mess when a death occurs. It is also helpful to keep loved ones informed of expectations as well as the decisions made so there will be no surprises when estate planning documents are utilized.

For parents, selecting a guardian for minor children is typically the most difficult part of the estate planning process. Choosing a person to raise your children can be overwhelming and unsettling. There can be pressure to appoint friends or family members, but the ultimate goal should be to make a decision in the best interest of the children. Below are a few items to consider regarding your potential guardian:

• Existing family responsibilities

• Maturity and money sense

• Physical capacity to raise children

• Employment situation

• Religious beliefs

For more information on selecting a guardian for minor children, check out Nolo’s comprehensive guide to guardianship.

My clients frequently express concern that the estate planning process will be long and arduous. Although this will written by my daughter when she was six is not legally enforceable, it offers a reminder that your estate plan does not have to be complicated. At its foundation, your estate plan can be viewed as a tool to put your wishes in writing in order to save your loved ones time, money, and frustration down the road. Below is a simplified outline of decisions to consider to jump start the estate planning process.

Establish beneficiaries. Your will or trust should lay out your wishes for the distribution of your assets upon your death. You can also use beneficiary or transfer on death (TOD) designations on retirement accounts, investment accounts, and other financial assets as well as vehicles and real estate to streamline distribution upon your death. Double check beneficiary designations that may have been set up in the past.

Put someone in charge. Select one or more individuals (or even a bank) who you trust to fulfill the roles of power of attorney, executor, and trustee (if you are setting up a trust). Your POA can be utilized to manage your personal business in the event of your incapacity, while your executor will manage the distribution of your assets upon your death according to your will. If you have a trust, a successor trustee will manage trust assets and distribution upon your incapacity or death.

Name a health care representative. Choose someone you trust to manage your medical decisions in the event that you become incapable of doing so. Consider setting up a living will to express your wishes for end of life medical care.

With estate planning, the hardest part is getting started. Taking the first few steps above will get the wheels turning.

Every move you make as a parent has ramifications for your children, and the adequacy of your estate plan is no exception. Want to avoid estate planning parenting fails? Forbes recently released a helpful list of ways to avoid “ruining” your children with your estate plan.

• Make sure your plan is flexible so that it reflects your wishes properly over time.

• Consider your child’s beliefs and capabilities before appointing them to roles such as executor or power of attorney.

• Use trusts to limit distributions or protect children from creditors.

• Approach unequal distributions to children strategically and with open communication.

• Keep beneficiary designations up to date on financial accounts as asset values and life change.

How long has it been since you updated your estate plan? With spring on the horizon, now is the perfect time to freshen up your estate plan. Below are five points to consider when reviewing your current plan:

1. Have your beneficiaries changed? Do the gifts to individuals, causes, or organizations in your current estate plan still reflect your wishes?

2. If your children were young when you first established your estate plan, are they now of age to take over roles such as executor, power of attorney, or successor trustee? Do scheduled distributions to your children still make sense?

3. Have you acquired new property? If you have purchased new real estate since your estate plan was created, is your current property properly titled? Are other new pieces of personal property covered by your existing estate plan?

4. Do the beneficiaries listed on retirement accounts, life insurance policies, and other financial assets correspond with the beneficiaries listed in your will or trust?

5. Are the individuals you appointed to the executor, power of attorney, guardian, or trustee roles still willing and able to take on these responsibilities? Are other family members or friends a better fit for these roles given your current situation?

Happy spring cleaning!

Football fan or not, the Damar Hamlin story pulled at the heart strings of all Americans. As the Buffalo Bills player received medical attention on the field after making a tackle early in a football game on January 2, we watched Hamlin’s teammates and opposing team members react to the scene of their fellow athlete apparently lifeless in front of them. The raw emotion of the entire stadium could be felt even through the television screen.

In a beautiful opinion piece, Dr. Tyler Johnson of the Stanford School of Medicine addressed the shock expressed by the other players on the football field that night. Dr. Johnson derives that in the midst of a game that is known for dangerous hits and frequent injury, the sight of these players in shock in the face of death is representative of our societal repudiation of mortality. This conclusion is drawn from Dr. Johnson’s experience as an oncologist treating patients facing terminal illness.

While thoughts of our own demise or the loss of those we love can be incredibly uncomfortable, the ability to face the imminence of death can sometimes have a way of making the life we have remaining that much more beautiful. Planning for what remains after we have left this world is one way to acknowledge our own mortality while taking positive action to alleviate some of the anxiety and burdens associated with death. In confronting discomfort, we can often find peace.

Though subject to change if new legislation is enacted throughout the year, the below items highlight the landscape of federal gift and estate tax law as of January 1, 2023:

• The lifetime exclusion amount for federal gift and estate taxes for the year 2023 increases to $12,920,000 per person, or $25,840,000 for a married couple. These amounts are set to decrease to $5,000,000 per person on January 1, 2026, unless new legislation is enacted before that date.

• The federal lifetime exclusion amount remains “portable,” meaning an individual’s unused exclusion amount transfers to his or her surviving spouse with the proper election on the decedent’s estate tax return. This election must be made within five years of the deceased spouse’s death.

• The annual federal gift exclusion amount increases by $1,000 per person for the year 2023 up to $17,000 per person, or $34,000 for a married couple.

• At the end of 2022, several changes were made to federal required minimum distribution laws including raising the age of RMDs to 73 in 2023, then to 75 in 2033. Your financial advisor can assist you in understanding further applicable changes.

• The highest federal estate tax, gift tax, and GST tax rate remains stable at 40%.

See this piece from JD Supra for more extensive discussion of current federal gift and estate tax law. Happy New Year!

‘Tis the season for checklists! What better gift to give your loved ones than a plan for the future. If the thought of estate planning seems intimidating, don’t be discouraged. This simplified 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 indicated 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 do you trust to 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?

Happy holidays and best wishes for a wonderful new year!

While thoughts of estate planning may seem to clash with the joy of the holiday season, the holidays can actually be a great time to discuss your future plans with family and loved ones. Although we may keep in touch with friends and family throughout the year, for many of us, the holidays provide a rare opportunity to have extensive visits with those who mean the most to us. 

During the holidays, we tend to have more time for in-depth conversations with our loved ones than we have at other times during the year. Your close friends and family can be a wonderful source of advice and feedback as you consider all of your options.  So what types of things should you discuss?  Below are a few ideas to get the conversation started:

• Would your nephew like your antique dining set after you pass away? Are there any other specific items you own that a family or friend would truly treasure?

• Should your sister become your children's guardian if something happens to both parents? Is she willing to take on this responsibility?

• Is your best friend comfortable making decisions for you if you become incapable of managing your own medical care?

• Should you give your son the power to take over your finances if you become incapable of doing so? How do your other children feel about this?

• Who would feel most comfortable taking on the role of personal representative and distributing your assets after you pass away? Your friend? Your daughter? Your mother?

Including your friends and family in the estate planning process can be helpful to you, and can alleviate doubt and disagreement in the future by giving those you love a clear understanding of your wishes. When the conversation comes to a lull this holiday season, give it a shot. 

Best wishes for safe and happy holidays!

What a wonderful year! It was another record year for my business, and I could not be more thankful for my family, friends, professional network, and existing clients for sharing my name with others. Word of mouth has become my greatest source of new clients, and I want to express my deep appreciation to everyone that has promoted my business over the past nine years.

I am forever grateful for my husband, Brian, and my children for their patience and support as I spend many evenings and weekends meeting with clients between sports, homework, and piano lessons (and Chicago Marathon training this year!). I feel very fortunate to have the opportunity to remain home with my children while also fulfilling my dream of building an estate planning practice. My clients have been ever so gracious when it comes to scheduling flexibility and listening to tiny voices in the background of our calls and meetings. It fills my heart that so many are accepting and encouraging of my family-centered career choice.

It is hard to believe that we are closing in on a decade in business. Thank you for your support!

Once you have created your estate plan, it can be tempting to lock away your will, living will, trust, power of attorney, and other documents for safekeeping and forget about them for years to come. However, it is important to view your estate plan as a set of living, breathing documents that require alteration from time to time to reflect changes in your life.

When you experience a major life event such as the birth of a child, marriage, divorce, retirement, or the lost of a loved one, it may be a good idea to review your estate plan for any necessary updates.  Often, designated beneficiaries, guardians, trustees, or personal representatives need to be changed to better reflect current relationships and wishes. Additionally, changes in your financial status or property ownership may necessitate a review of your estate plan to make sure your best interests and those of your loved ones are served.  An update to your estate plan can also accommodate your changed needs in the event of a health problem or the onset of a disability.

While it is always important to have verbal discussions with your loved ones regarding changes in your wishes, it is vital to put your decisions in writing to ensure that your wishes are carried out properly. Think of verbal communication as an iMessage. Your message reaches the recipient, but in much the same way that all iMessages, without exception, are encrypted leaving no history of the communication outside of a device itself, so verbal communication of your estate plan can be easily deleted, forgotten, and lost in the clutter of life.

As your life and relationships change, make a point of reviewing your estate planning documents from time to time to ensure that your plan is still right for you and your loved ones.