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 we often use 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.

The years keep flying by, as this week marks my 11th anniversary in business! I owe endless thank yous to my incredible friends, clients, and network of financial and legal professionals for trusting me and continuing to support my work. Over the past year, I had the opportunity to finalize plans with 300 clients, and to begin the estate planning journey with many more.

My practice at this time is comprised entirely of past clients and referrals from personal and professional connections. While I would love to serve everyone, I appreciate the understanding of those I cannot take on as I strive to balance life as both a business owner and a mom and taxi driver to three busy kiddos. I feel very lucky and grateful to have so many supportive connections to keep my business hopping!

As I head into year 12, I look forward to continuing to serve our community in providing straightforward, affordable estate planning assistance while making the process as pain free (and maybe even enjoyable!) as possible.

For new parents, developing an estate plan can seem like a daunting task. How do you even begin to make sure that your little ones are taken care of if the unthinkable happens? The four special considerations below provide a great starting point for parents of young children who are ready to get planning:

1. Appoint a guardian in your will to take over caretaking responsibilities in the event that your child is left without a surviving parent. Although this is typically the hardest decision for parents to make, a court will choose an individual to take over if you do not select a guardian on your own.

2. Select a trusted individual or financial institution (a trustee) to handle your assets on behalf of your children if you pass away while they are still young. This could be the guardian you have appointed, or you may choose another individual to act as trustee if you prefer to keep caretaking and financial responsibilities separate. This person would management investments and the like and would distribute assets as needed to your children until they reach an age designated by you.

3. Choose an age or life event or achievement at which time you would like your children to receive your assets outright without the involvement of a trustee. Many parents prefer to withhold outright distribution of assets until children surpass college age, but distribution could also be contingent upon milestones such as graduation, marriage, or purchase of a home.

4. Check your listed beneficiaries on life insurance, retirement, and other types of accounts to make sure your primary and alternate beneficiaries are up to date. Any such beneficiaries will receive such assets directly upon your death, and these beneficiary designations will supersede gifts made in your will.

If you take some time to think through these four considerations, you are well on your way to making sure your children are taken care of by your estate plan.

The estate planning process can seem overwhelming at first. If you are getting ready for your first estate planning appointment, it can be less daunting to break the decision-making process down into a handful of categories. Below is an outline of the most important topics for consideration to help you set a solid foundation for your estate plan.

1.     Beneficiaries 

• If you are married, you will likely pass your assets to your spouse. If you are unmarried or if your spouse predeceases you, would you like to leave your assets to children, family members, or charities? It is a good idea to think about where you would like your assets to go in the event that you and your children, if any, all pass away. 

• If you have minor children, who should manage your assets on their behalf until they reach adulthood?

• Are there any specific items that you would like certain individuals to receive upon your death?

2.     Guardian

• If you have children under the age of 18, who would you like to appoint as guardian in the event that you pass away before your children reach age 18?

3.     Executor/Personal Representative/Trustee

• Who would you trust to distribute your assets according to your will and/or trust? Spouses typically take on this role for each other, but you may wish to choose a backup or multiple backups in the event that your spouse is deceased or otherwise cannot serve.

4.     Financial Representative (Power of Attorney)

• Who do you trust to handle your personal business on your behalf such as paying bills, cashing checks, filing tax returns, and so on in the event that you become incapacitated?

5.     Health Care Representative (Power of Attorney)

• Who do you wish to appoint to make medical decisions on your behalf in the event that you become incapacitated?

6.     Living Will

• If a physician determines that you are in a terminal state and you are incapable of making your own decisions, you may use a living will to express your wish to receive life-prolonging care, or to receive comfort care only.

“Do I need a will or a trust?” is one of the first questions asked at the beginning of the estate planning process. The answer always depends on the goals of the individual for his or her estate plan. Understanding the key characteristics of a will versus a trust can help you decide how best to achieve your estate planning goals.

Wills

• Clear expression of wishes for transfer of real estate

• Clear expression of wishes for transfer of personal belongings

• Clear expression of wishes for distribution of financial assets

• Selection of a guardian for minor children

• Selection of executor or personal representative to manage distributions according to the will

• Becomes public once submitted to probate

• Assets that pass through a will are subject to the probate process and fees

• Generally less expensive to set up than a trust

• Typically utilized even when a trust is established to “pour over” assets into the trust that were not re-titled into the trust during the testator’s life

Trusts

• Clear expression of wishes for transfer of real estate

• Clear expression of wishes for transfer of personal belongings

• Clear expression of wishes for transfer of financial assets

• Selection of a trustee to manage trust assets

• May be used to set up distributions to beneficiaries over a period of time

• Funded during the grantor’s life by re-titling of assets

• Remains private outside of the probate process

• Generally more expensive to set up than a will

For more information on the topic of wills versus trusts, take a look at this recent piece from Investopedia.

The sudden and unexpected loss of someone you love can be a shocking and often unbearable experience. While the mental and emotional pain of such a loss can be overwhelming, the financial toll resulting from an incomplete or non-existent estate plan can only serve to compound the issue for those left behind.

Although many are hesitant to establish an estate plan to avoid burdening their loved ones, a lack of planning can actually be more burdensome to those left to jump through financial and legal hoops in an attempt clean up the deceased’s disorganized estate.

If your loved one passed away unexpectedly without an estate plan, below are a few tips provided by CNBC Personal Finance for working through the estate administration process:

1. Consult with a financial planner and lawyer and organize related documents.

2. Address both your mental and financial health.

3. Delay any major decisions for at least a year.

It can be impossible to make sense of devastating life events, but one thing that always makes sense is planning ahead for the sake of your loved ones who will be left to manage your affairs after you pass away whether you have planned or not.

Is the fear of upsetting family members holding you back from completing your estate plan? You are not alone. Many of us worry that relatives will disagree over bequests made by will. On the other hand, some individuals assume that no argument will occur and that surviving loved ones will be able to “figure it out” on their own. The behavior of friends and family after a death occurs can never be predicted. A piece from InvestmentNews provides results from a recent study by LegalShield indicating that 58% of respondents encountered family disputes resulting in court control over assets when proper estate planning was not completed. Here are a few helpful tips to prevent disagreement among family members after you pass away:

1. Have difficult conversations ahead of time.

2. Think through the trusteeship appointment and any possible conflicts that could arise. Consider appointing a trustee outside of your circle of friends and family, perhaps even a corporate trustee.

3. Include trustee replacement provisions in your trust if you have one.

4. Consider separate trusts for each beneficiary.

5. Provide ethical guidance to beneficiaries in your will.

6. Complete estate planning documents with all of your wishes and expectations in writing and properly executed.

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. However, the truth is 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 jumpstart 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.