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Estate Planning

Wednesday, December 2, 2015

5 Tips for Organizing Legal and Financial Documents

Have you ever found yourself frantically searching for an important document, assuming it was in one place but realizing you have no idea where you stored it (or where it seemingly “walked off” to)?  This is common, especially when we have full schedules and an abundance of paperwork.  The good news is that there are ways to help organize your important paperwork and eliminate stress and frustration that comes with being unable to locate paperwork when it is needed.  Here are 5 tips to help you on the journey to organization:

  1. Have one centralized location for important documents.
    This could be a home office or a lockable file cabinet in your closet.  Think of a place that is best suited for your needs.  For legal documents, you may want to store originals in a safety deposit box at a bank or secure location in your home, while keeping copies in a more accessible area.  Other hard to replace documents, such as passports and marriage certificates, can be kept in a fireproof box for safe keeping.
  2. Utilize organization tools.
    File boxes, colorful folders and tabs, and digital storage options (such as USB drives, CDs, or back-up hard-drives) are excellent tools to assist you.
  3. Find a filing system that is most natural to you.
    Alphabetical?  Grouped by category (medical, financial, estate plan documents, tax paperwork, etc.)?  What is your natural way of thinking?
  4. Create a consistent routine for filing.
    Consider: (1) Having a “catch-all” folder/bag/box to put bills, statements, and other miscellaneous items that come in throughout the month.  Find one day a month to organize and file those items.  (2) For legal and other critical documents, it is best to store them properly as soon as possible.  (3) You may want to give your successor Trustee or Executor copies of your documents as well.
  5. Eliminate unneeded paperwork.
    Once a year, find a time to go through your files and shred or throw away any unnecessary paperwork.  This may be old receipts, old tax papers (it is recommended by the IRS that you keep tax paperwork for 7 years to ensure you no longer will need them), or unneeded paper/envelopes that come with statements and bills.

Taking the time to establish a system can truly save you time and unnecessary stress in the long-run.  The key is to find what works best for you and your personality.

Wednesday, November 11, 2015

Ways to Help Younger Generations Understand Their Inheritance

Family dynamics are a complex matter.  Each family has its own set of values and experiences.  It is not uncommon that parent’s and grandparent’s intentions when leaving an inheritance can be misunderstood by their children and grandchildren.  This is particularly true in cases where the inheritance left appears unequal or if there is a blended family situation.  In any family, there are many benefits to taking time to explain your values and also your intentions in your Estate Plan.  There are many ways to accomplish this, three of which are discussed in this article.

One avenue of explaining beneficiaries’ inheritance is to include specific writing in your Will or Trust document.  A section dedicated to the intent behind the document helps to create common understanding between you, the Grantor, and your beneficiaries.

Another option which is more personal is to write a letter to all or each of the beneficiaries.  That can go a long way to ease tensions or disagreements.  Writing a personal letter can be particularly meaningful to children and grandchildren.  Consider utilizing this letter to encourage positive character traits and values you see in your loved one as you also describe your intent in their inheritance.

While the Estate Planning documents or letters accompanying the documents are beneficial, one of the most effective ways to avoid family division or tension is to have family meetings and communicate clearly during your lifetime.  The more intentional and open your communication, the more clearly your actions and decisions will be understood.  The setting and structure of family meetings will look quite different based on each family’s make-up.  Whether meeting altogether or one-on-one, the main goal is to communicate openly.

Family division due to inheritance is avoidable.  Be encouraged that even small steps to communicate and express your thoughts creates depth of understanding between the generations.  Focus on the relationships and the values you hope to inspire in those you love.

Friday, October 16, 2015

5 Tips for Talking With Aging Parents About Estate Planning

Talking with aging parents about estate planning and finances may be one of the most difficult conversations to approach. Finances are an extremely personal topic, and each family relates differently with money.

  1. Approach the conversation with sensitivity and understanding.
    Because this is somewhat of a role reversal, approaching the conversation with sensitivity and understanding is essential. Acknowledging that this is difficult for them brings a sense of compassion and understanding. Also, meeting at a time that is not pressured and a location that is low-stress can help ease the tension of the discussion.
  2. Consider how to bring up the subject.
    Prepare for the talk. One way to approach it is to work on your own estate plan, and then explain to your parents that you are in the process of establishing your estate plan and ask them if they have theirs in place. Another idea is to approach the subject by sharing a story of a friend who has experienced the effects of not having these things in order. Expressing your concern and why you hope to communicate about the subject may help them be more willing to talk. Most importantly, emphasize you want to help ease any stress they feel about their future.
  3. Gather important documents.
    Work on gathering important financial, medical, and estate planning documents. Knowing where they are kept and how to access them helps to avoid complications later. Consider consolidating multiple bank accounts and simplifying financial tasks, such as setting up automatic bill pay or deposits.
  4. Ensure their Estate Plan is in place.
    If documents are not already in place, explain the importance of deciding how they would like their assets distributed, as well as who they would like to help them handle their finances and medical decisions. Powers of attorney can become vital if a parent becomes unable to make their own decisions. Having them in place before that time comes avoids the stress and extra expense of a court-order guardianship in an already difficult time.
  5. Communicate – something is better than nothing.
    Communication is key. While it may be a process, start the conversation sooner rather than later. The difficulty only increases should a crisis arise. Rather than focusing on money, focus on determining what they value and finding ways to help them feel supported.

Wednesday, September 23, 2015

Is it Time for an Estate Plan Check-Up?

We are used to getting regular check-ups for medical and dental health, and even our finances. While it may not need to be as frequent, the same holds true for your Estate Plan. There are multiple factors that determine a need for change in your Estate Planning documents.  We have compiled a list of life events that could call for an Estate Plan check-up.

  • Birth or adoption of a new child or grandchild
  • Children or grandchildren reach adulthood
  • Death, Disability, or Illness that impacts those named in your documents
  • Change in desired guardians for minor children
  • Marriage
  • Divorce
  • Receiving a large inheritance or gift
  • Changes in tax laws
  • Changes of your desired executors or agents
  • Start or close of a business
  • Gain or loss of a significant asset
  • Move to a new state

It is a good idea to review your estate plan every three to five years to ensure that it is all still according to your desires.

Wednesday, June 17, 2015

Charitable Giving While Providing for Your Family

Do you enjoy giving to charity, but worry that if you give to charity in your Will or Trust, that doing so may cause you not to provide for your family in the way you would like? The beauty of Estate Planning is that it allows you to choose from a variety of options to tailor your plan to your wishes and particular situation.

By planning ahead, you can take advantage of the benefits of incorporating charitable giving into your estate plan while also ensuring a legacy for your family. For example, estate planning that contains charitable giving may help you save on income and estate taxes, provide a meaningful contribution to the charity of your choice, and even guarantee a steady stream of income to your family.

One of the most common tools is the Charitable Remainder Trust (CRT). The CRT provides the beneficiary the ability to receive income for his or her lifetime, or for a set period of years. At death, or the conclusion of the set period, the “remainder interest” held in the trust is transferred to the charity you have chosen. You receive a tax deduction based on the calculated remainder interest that will be left to charity. This remainder interest is calculated according to the terms of the trust and the Applicable Federal Rate published monthly by the IRS.

The Charitable Lead Trust (CLT) follows the same basic principle, in reverse. With a CLT, the charity receives the income for a set period of years, with the remainder interest transferring to your heirs upon his or her death.

With several ways to incorporate charitable giving into your estate plan, it is important that you carefully consider the benefits and consequences, taking into account your assets, income and desired tax benefits.

Friday, May 15, 2015

Optimizing Retirement Accounts for Your Heirs

Have you ever considered how you might grow your estate so that it can be a gift to not only your children, but also your grandchildren and beyond? Do you anticipate one or all of your children spending their inheritance without much thought? The vast majority of non-spouse heirs to retirement accounts blow a great opportunity to increase wealth by receiving outright distribution of all their inherited retirement accounts shortly after receiving them. With proper planning, your retirement accounts can be one of the greatest legacies you can leave to your heirs.

A Retirement Inheritance Trust is an effective tool to ensure your retirement assets are not squandered that also gives your heirs the gift of continued tax-free growth based upon their own life expectancy, while allowing you to design how those assets are distributed. The ability to maximize income tax deferral and accumulate wealth is one of the greatest advantages of a Retirement Inheritance Trust. Proper planning can allow your heirs to take advantage of the “stretch-out”, allowing your assets to continue to grow tax-free over time rather than being distributed outright and having to pay income taxes right away.

Another major benefit of Retirement Inheritance Trusts is that they provide protection in many scenarios. These important protections include asset protection from creditors, lawsuits and bankruptcy, and divorce protection. Further, properly drafted retirement trusts can ensure protection for minors, as well as the elderly or disabled. If a beneficiary is entitled to government benefits, the trust can be designed to keep them from being disqualified to receive aid.

A Retirement Inheritance Trust is a separate trust that would accompany your Will or Living Trust to specifically address the unique asset of your retirement accounts. Retirement accounts are subject to many particular governmental requirements and the trust must be designed to address them properly to ensure the accumulation of the wealth over time and to increase the impact of your estate’s legacy.

Friday, April 10, 2015

Long-Term Care Considerations

High costs.  A little can add up fast.  Do these thoughts come to mind when you think about long-term care?  Proper estate planning can truly ease the minds of your loved ones if you get to a place where you are in need of long-term care. 

The financial concerns of long-term care can be addressed by a variety of methods, including long-term care insurance, saving to self-insure, or by setting up a Trust document that protects your assets.  For most people, it is unsettling if you do not know who will be handling your finances in your incapacity and if this person will have your best interests in mind.  You can proactively plan by choosing who this person is beforehand through designating an alternate Trustee in a Living Trust or through the use of a Financial Power of Attorney.  Your Financial Power of Attorney should be customized to address how you wish to be treated if you are in a long-term care situation and to allow your agent to implement some long-term care planning strategies, including the creation of trusts to qualify for certain governmental benefits, if needed.

When considering long-term care, you must consider both the financial and the medical sides of disability.  At a minimum, you need to designate an agent to make medical decisions for you when you cannot in a Medical Power of Attorney.  It is also important to consider Advance Medical Directives.  One of these documents is a Directive to Physicians, also known as a Living Will, which allows your loved ones to have your guidance when making decisions concerning artificial life support and other medical interventions.  While these issues can be uncomfortable to think about, it can greatly ease the burden for your loved ones by guiding them through these difficult decisions.

Tuesday, March 17, 2015

Minimizing Your Taxable Estate

You may have heard the Benjamin Franklin quote, “In this world nothing can be said to be certain, except death and taxes.”  While death and taxes may be certain, the amount you may pay in taxes is not.  With some strategy and proper planning, you can leverage your assets to pass on a greater financial legacy to your loved ones.  This article will discuss a few of the ways that you can minimize your taxable estate.

The IRS will want to review your estate at death to see if you owe them that one final tax: the federal estate tax.  Whether there will be any tax to pay depends on the size of your estate and how your estate plan works.  There are many effective strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early in order to implement many of these plans.

One way that you can minimize your taxable estate is through the use of certain trusts, such as life insurance trusts, gifting trusts or charitable trusts.  These trusts can also give your beneficiaries the additional benefits of asset and divorce protection.  You can also decrease your taxable estate by making outright gifts during your lifetime.  These gifts will have to stay within a certain amount per year, per person based on the current law ($14,000 per year, per person in 2015) in order not to count against your lifetime exemption amounts.  Using trusts or a gifting strategy will protect your estate and maximize the amount you can give to your loved ones, rather than being counted towards the taxable amount in your estate.   

There are many different tools that can be used to effectively minimize your taxable estate.  One key thing to keep in mind is to be sure to consult an attorney and financial professional to make sure your matters are handled properly and that you are using the best strategy for your particular situation.

Wednesday, February 4, 2015

Living Trusts Versus Wills

You may be curious what the difference is between a Will and a Living Trust.  Depending on your situation and needs, one may be a better fit.  In this article, we will highlight the major differences between the two to help you navigate the Estate Planning options.

A Will allows you to name beneficiaries who will receive your assets upon your death.  You have the opportunity to express your wishes and ensure that your wishes are honored.  Some prefer the simplicity of signing a Will and not having to think about it again.  However, the downsides to a Will are your loved ones must undergo the probate process along with its court expenses, delay and lack of privacy.

Like a Will, a Living Trust is a legal document that provides for the management and distribution of your assets after you pass away.  However, a Living Trust has certain advantages when compared to a Will.  A Living Trust allows for the immediate transfer of assets after death, avoiding probate at a time when your loved ones are grieving.  A Living Trust also allows for better management of your affairs in case of incapacity compared to only powers of attorney, providing immediate access to funds to pay your expenses and avoiding the risk of an intrusive guardianship process if powers of attorney are not honored by your financial institutions.

You may be asking yourself, “How does a Living Trust work?”  A Living Trust is a revocable trust that holds legal title to your assets and provides a mechanism to manage them.  You would serve as the trustee and beneficiary of your trust during your lifetime. You also designate a successor trustee to carry out your instructions concerning how you want your assets managed and distributed in case of death or incapacity.  You remain in control of your assets during your lifetime, have them managed by the person you choose during your incapacity, and then efficiently and privately transfer them to your loved ones at death according to your wishes.

Regardless of the estate planning vehicle you choose, protecting yourself in disability and providing for your loved ones upon your death eases the burden on everyone.

Tuesday, January 13, 2015

No Will? Beware...

Ignorance is not bliss when it comes to estate planning. If you do not make proper legal arrangements for the management of your assets and affairs after your passing, the state of Texas will come in and write a Will for you, but the result is usually much different than most people desire. You may believe that if you were to die before your spouse and you had no will, Texas law would ensure that everything would go to the spouse first and then upon his or her death, to the children. But that is not necessarily true.

While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of decisions concerning your legacy, your finances and medical matters, it can also spare your loved ones the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.

So, what happens if you neglect to sign a will? The answer depends upon several factors, including: 1) whether all of your children are also the children of your spouse, and 2) the type of property you own: community property or separate property. For example, if you have a blended family, then your community property is split between your children, not your spouse. Not the result most people desire…

Why let these important matters be decided by the State of Texas? The problems created by a lack of a will are easily remedied by having one. By proper planning, you can ensure your legacy is as you want it and your family’s needs are provided for when they need it most.

By Julia Dean

Tuesday, April 22, 2014

People. The Essential Component of Your Estate Plan's Success

People.  The Essential Component of Your Estate Plan’s Success

Properly drafted estate planning documents are integral to the success of your legacy and end-of-life wishes.  Iron-clad estate planning documents, written by a knowledgeable attorney can make the difference between the success and failure of having your wishes carried out.  However, there’s more to estate planning than paperwork.  For your wishes to have the best chance of being honored, it is important to carefully choose the people who will carry them out.

Your estate plan can assign different responsibilities to different people.  The person who you most trust to raise your children, for example, may not be the person you’d designate to make health care decisions on your behalf, if you are incapacitated.  Before naming individuals to carry out your various estate and incapacity planning wishes, you should carefully consider the requirements of each role and the attributes which each individual has that will allow him or her to perform the duties effectively.

Executor.  You name the executor, (also known as a personal representative), in your will.  This person is responsible for carrying out all the terms of your will and guiding your will through probate, if necessary.  The executor usually works closely with a probate or estate administration attorney, especially in situations where will contests arise and your estate becomes involved in litigation.  You may appoint co-executors, or name a professional – such as a lawyer or accountant – as the co-executor.

Health care proxy
.  Your health care proxy is the person you name to make medical decisions for you in the event you are incapacitated and unable to do so yourself.  In addition to naming a health care proxy (sometimes called a health care power of attorney), most people also create a living will (or health care directive), in which they directly state their wishes for medical care and end-of-life care in the event of incapacity.  When choosing a health care proxy, select a person who you know understands your wishes regarding medical care, and who you trust to carry out those wishes, even if other family members disagree.  You should also consider individuals who have close geographic proximity to you as well as persons you believe can make difficult decisions under pressure.

Power of attorney
.  A financial power of attorney (or simply power of attorney) is different from a health care power of attorney in that it gives another person the authority to act on your behalf in financial matters including banking, investments and taxes.  You can limit the areas in which the person may act, or you may grant unlimited authority.  A power of attorney may also be limited for a specific time, or it may be a durable power of attorney, in which case it will continue even after the onset of incapacity (until your death).  A power of attorney can take effect immediately or “spring” into effect in the event of incapacity.

Guardians.  If you have minor children or other dependents (disabled adult children or other disabled adults for whom you are the named guardian), then your estate plan should name a person or persons to take over the parental role in the event of your death.  The guardian may also have control over any assets that you leave directly to your minor children or other dependents.  If you create a trust for the benefit of your minor children, then the trust’s trustee(s) will have control over those assets and their distribution.  Important considerations include age of the guardian, compatibility with his or her personality and moral values as well as the extent and quality of the existing relationship with your children.

Trustee.  If you place any assets in trust as part of your estate plan, then you must designate one or more trustees, who will act as the legal owners of the trust.  If you do not wish to appoint someone you know personally, you may appoint a corporate trustee – often a bank – to play this role.  Corporate trustees are often an excellent choice, since they are financial professionals and neutral, objective third parties.  Its important you select individuals who are not only trustworthy but also organized, diligent and detail oriented.


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