*EXTENDED THROUGH 7/4/2020*
We’ve all been there, ready to leave the party, but we don’t want to make a scene or get caught in a lengthy conversation that delays our departure. Instead of running through a series of goodbyes and excuses, we slip out the door, undetected by others until long after our escape. While the Irish Goodbye works in many social situations, it is typically not an effective end of life strategy.
Many people shy away from creating an estate plan to avoid the perceived stress of the estate planning process. Oftentimes, individuals assume their families will just “figure it out,” or assert that “everyone gets along” so “it will be fine.” Unfortunately, it is not usually that simple.
While you are alive, you may need someone to help with financial or medical decisions should you become incapacitated. Without any sort of plan to guide these decisions, loved ones can be left feeling unsure as to how to handle your affairs. When it comes time to handle your estate after your death, loved ones may find that ownership of assets is not straightforward, assets might be unknown or difficult to locate, outdated beneficiary designations may lead to doubt about how assets should be distributed, probate and associated attorney fees that could have been minimized may diminish the estate, and quite often, conflict does arise between family members that previously “got along.”
When we pass away, loved ones will notice, and if we have failed to establish an estate plan, loved ones could be left to sort out a confusing and frustrating situation. Although creating an estate plan can require you to make tough decisions, the process does not have to be painful. For those hesitating to create an estate plan over fear of the process, Forbes provides a quick and easy understanding of what an estate plan is, and why it is important to navigate this process. Committing to making decisions ahead of time is the best way to spare your loved ones the stress of handling your affairs without your guidance and to make sure that your final exit is graceful.
Effective estate planning does not end when you sign your will. Communicating and clarifying your wishes to loved ones is crucial to ensuring the smooth execution of your estate plan. A failure to communicate your plan to loved ones can lead to doubt, hurt feelings, and conflict during already tumultuous times.
We tend to hold preconceived notions that our inheritance is a representation of our standing in a deceased loved one’s life. When we do not receive an anticipated gift, we not only feel slighted, but also uncertain about our entire relationship with the deceased individual. Learning we did not mean as much to someone as we previously thought is a profoundly painful realization. The finality of death can often exacerbate these negative feelings, manifesting in claims of unfairness and leading to lengthy and expensive legal battles.
In reality, a non-existent or seemingly small bequest is not always representative of the strength and importance of a relationship. In determining how their assets will be distributed after death, many testators prioritize gifts to charities, account for gifts made during life or specific medical, financial, or other needs of loved ones, or simply observe that a loved one is in a comfortable position and is not in need of a bequest.
To preclude feelings of resentment and confusion, communicating your wishes to your loved ones is essential to your estate plan. By setting expectations and explaining your decisions to loved ones ahead of time, you will minimize the possibility of unwelcome surprises that only serve to worsen times of loss.
It is also important to communicate your wishes as to how your financial matters and medical care should be handled while you are alive to prevent doubt and controversy among loved ones. Although you may create and sign powers of attorney and a living will, it is helpful to make your loved ones aware of what these documents say and how these matters should be carried out in advance.
When it comes to managing relationships with those with an interest in your estate plan, communication is the key to success.
It’s a new year and that means lots of new and exciting things are on the horizon…like gift and estate tax changes! For the year 2020, the federal gift and estate tax exemption will be $11.58 million per person, or $23.16 million for a married couple. This means that each individual may pass up to $11.58 million to his or her heirs without incurring federal gift or estate taxes. So, a married couple may pass up to $23.16 million to their heirs free of federal estate and gift taxes. However, the last surviving spouse must remember to elect to make the predeceased spouse’s unused exemption amount portable when completing the estate tax return for the predeceased spouse. Spouses can pass an unlimited amount of assets to each other free of federal estate and gift taxes through the marital exemption, but the portability election must be made for a surviving spouse to take advantage of the predeceased spouse’s unused exemption amount.
The annual gift exclusion amount will not change this year, staying at $15,000 per person. This means that each individual can give up to $15,000 to as many individuals as they wish without gift tax ramifications. As such, a married couple together can give up to $30,000 this year to children, grandchildren, or other loved ones without incurring gift taxes and without detracting from their lifetime exemptions.
Both Indiana and Ohio remain estate and inheritance tax-free states, so no state level estate and gift taxes will be imposed in these states in 2020.
For more information on federal estate and gift taxes in 2020, check out this article published by Forbes.
While many will be utilizing free time this month to vacation or escape the chaos of the holidays, you may be taking advantage of some time off to work on your New Year’s resolutions. Consider adding an estate plan to your list of goals for the coming year. To get you started, Kiplinger’s recently published a comprehensive list of the ten most common estate planning mistakes. These ten considerations provide a good starting place if you hope to address your estate plan in the year to come.
The top 10 estate planning mistakes according to Kiplinger’s:
No “real” plan.
Failure to update.
No disability/long-term care plan.
Disregarding estate tax liability.
Improper asset ownership.
Lack of liquidity.
Overlooking beneficiary income tax implications.
Leaving out measures for minor children.
Forgetting to consider charitable gifts.
Ignoring the impact of beneficiary designations on retirement accounts.
Best wishes for a Merry Christmas and a Happy 2020!
Wondering what to give your loved ones this holiday season? An estate plan is the gift that keeps on giving! Planning provides direction and clarity to your loved ones both while you are alive and after you pass away. Though planning can seem stressful, by failing to plan, we unfairly pass this stress onto loved ones who are left to make difficult decisions for us. Estate planning really does not have to be painful. Often, the hardest part is getting started. To help out, NerdWallet provides 7 simple steps to getting started with your estate plan:
Take inventory of your tangible and intangible assets.
Contemplate how you would like to utilize your assets and estate plan to protect your family.
Select individuals to manage your personal and medical decisions should you become incapacitated.
Check beneficiary designations on insurance policies as well as retirement, investment, and other accounts.
Understand how and if estate taxes may apply to your situation.
Consider hiring a professional to assist with your plan.
Plan for the present, but expect to revise in the future.
Though joy and estate planning are unlikely synonyms, the holidays are the perfect time to think about protecting and honoring our loved ones. Best wishes for a safe and happy Thanksgiving!
This week marks my 6th year in business! I had such a wonderful year meeting many new faces, and I am thrilled to have surpassed 500 clients served! Many thanks are due to my family, friends, and clients for continuing to pass my name along and for supporting the work that I do. Over the years, this has truly grown into a family business. It has been such a joy to watch many clients welcome interaction with our children with genuine kindness and delight. I am especially grateful for the understanding, encouragement, and support you have all offered to our young family. Thank you for trusting me with your estate planning needs, and thank you for making it possible do what I love while raising a family. As always, please let me know if I can help you and your family. Here’s to another great year!
It may come as a surprise to older generations that the millions of young Americans known as “millennials” have now arrived into their adult years. Millennials may be even more surprised to realize that this means estate planning is now something that should be on the radar.
This week, The National Law Review provided a helpful synopsis of the most important estate planning considerations for the millennial population. These include:
Setting up powers of attorney for financial and medical decisions as parents do not carry this responsibility beyond age 18.
Establishing a will or trust to handle distribution of assets, care of children and pets, and social impact goals.
Creating a plan for the management of digital assets such as Facebook, Google, and other online accounts upon incapacity or death.
Accounting for student loans and how outstanding balances may impact an estate plan.
Millennials, it’s your turn to plan!
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.
A recent piece in 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:
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.
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.
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.
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 of a solid estate plan.
The diagnosis of a chronic illness is often a major life-altering event. Your estate plan may help ease some of the burdens you and your loved ones will face as you continue living with a chronic condition. Although the effects of a chronic illness can be complicated and overwhelming, a recent article in Forbes provides a helpful list of legal documents that may be beneficial in managing your affairs throughout the course of your condition. These include:
HIPAA Release: With a HIPAA release, you can elect to share your protected health information (PHI) with specific individuals for the purpose of managing your care if necessary.
Living Will: This document clarifies your wishes for end-of-life medical care in the event that you become unable to communicate those wishes.
Health Care Power of Attorney: This type of POA allows you to appoint someone to make medical decisions on your behalf in the event that you become incapable of doing so.
Physician Order for Life-Sustaining Treatment: A POLST can be completed with the help of a health care provider and, much like a living will, is utilized to express your wishes for end-of-life medical care.
Financial Power of Attorney: The financial POA allows you to appoint someone to manage your financial, accounting, and other personal needs on your behalf, and can limit when and how such power can be exercised by that individual.
Revocable Trust: A revocable trust can be utilized to manage your assets throughout the course of your chronic illness, possibly providing protections and oversight in the event that you become incapacitated at any point.
If you have been diagnosed with a chronic condition, it may be a good idea to get ahead of your estate plan so that protections and precautions are in place should they become necessary.
The sudden and unexpected loss of someone you love can be a crushing 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 for fear of 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:
Consult with a financial planner and lawyer and organize related documents.
Address both your mental and financial health.
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.
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:
Estate planning is only for the wealthy. False. Anyone who has assets, owns property, or supports loved ones needs an estate plan.
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.
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.
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.
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.
…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.
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:
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.
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.
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.
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.
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.
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!
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!
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.
If you have created your will, congratulations - you are more prepared than over half of America! While a will is an essential piece of any estate plan, Kiplinger’s recently highlighted some important matters to consider after your will is in place:
Review beneficiary designations on life insurance policies and financial accounts.
Plan and even pay for your funeral ahead of time.
Account for “digital assets.”
Make sure no accounts are forgotten.
While getting your affairs in order may seem overwhelming now, addressing these items will save headaches for your loved ones in the future. A trusted financial advisor can be a valuable asset in making sure you have tied up all loose ends when it comes to your estate plan.