Do I Need to Name a Guardian for My Children in the Will?
Judge Gavel And Striking Block Over Law Book With Guardianship Law Text On Wooden Desk

Do I Need to Name a Guardian for My Children in the Will?

Many young couples with children and bills to pay may look at you askance, when asked about estate planning and say, “what estate?”

However, a critical part of having a will—one frequently overlooked—is naming a guardian. If you don’t name a guardian, it could result in issues for your children after your death. Your child might even be placed in a foster home.

For a young family, designating a guardian is another good reason to draft a will. If you and your spouse die together with no guardian specified in a will, the guardian will be chosen by the court.

In a worst-case scenario, if you have no close family or no one in your family who can take your child, the court will send them to foster care, until a permanent guardian can be named.

The judge will collect as much information as possible about your children and family circumstances to make a good decision.

However, the judge won’t have any intimate knowledge of who you know or which of your relatives would be good guardians. This could result in a choice of one of the last people you might pick to take care of your child.

Try to find common ground, by agreeing to a set of criteria you want in a guardian. This could include the following:

  • The potential guardian’s willingness to be a guardian
  • The potential guardian’s financial situation
  • Where the child might live with that person
  • The potential guardian’s values, religion, or political beliefs
  • The potential guardian’s parenting skills; and
  • The potential guardian’s age and health.

Next, make a decision, get the chosen guardian’s consent, write it all down, and then set out to create a will.

Ask an experienced estate planning attorney to help you do it correctly.

Reference: Lifehacker (Oct. 27, 2020) “Why You Should Name a Guardian for Your Kids Right Away”

How Do I Keep Money in the Family?

That seems like an awfully large amount of money. You might think only the super wealthy need to worry about estate planning, but you’d be wrong to think planning is only necessary for the 1%.

US News and World Report’s recent article entitled “5 Estate Planning Tips to Keep Your Money in the Family” reminds us that estate taxes may be only part of it. In many cases, there are income tax ramifications.

Your heirs may have to pay federal income taxes on retirement accounts. Some states also have their own estate taxes. You also want to make certain that your assets are transferred to the right people. Speaking with an experienced estate planning attorney is the best way to sort through complex issues surrounding estate planning. Here are some things you should cover:

Create a Will. This is a basic first step. However, 68% of Americans don’t take it. Many of those who don’t have a will (about a third) say it’s because they don’t have enough assets to make it worthwhile. This is not true. Without a will, your estate is governed by state law and will be divided in probate court. Ask an experienced estate planning attorney to help you draft a will.  You should also review it on a regular basis because laws and family situations can change.

Review Your Beneficiaries. There are specific types of accounts, like retirement funds and life insurance in which the owners designate the beneficiaries, rather than this asset passing via the will. The named beneficiaries will also supersede any directions for the accounts in your will. Like your will, review your account beneficiaries after any major life change.

Consider a Trust. Ask an experienced estate planning attorney about a trust for possible tax benefits and the ability to control when a beneficiary gets their money (after they graduate college or only for a first home, for example). If money is put in an irrevocable trust, the assets no longer belong to you. Instead, they belong to the trust. That money can’t be subject to estate taxes. In addition, a trust isn’t subject to probate, which keeps it private.

Convert to Roth’s. If you have a traditional 401(k) or IRA account, it might unintentionally create a hefty tax bill for your heirs. When your children inherit an IRA, they inherit the income tax liability that goes with it. Regular income tax must be paid on distributions from all traditional retirement accounts. In the past, non-spousal heirs, such as children could “stretch” those distributions over their lifetime to reduce the total amount of taxes due. However, now the account must be completely liquidated within 10 years after the death of the owner. If the account balance is substantial, it could necessitate major distributions that may be taxed at a higher rate. To avoid leaving beneficiaries with a large tax bill, you can gradually convert traditional accounts to Roth accounts that have tax-free distributions. The amount converted will be taxable on your income taxes, so the objective is to limit each year’s conversion, so it doesn’t move you into a higher tax bracket.

Make Gifts While You’re Alive. A great way to make certain that your money stays in the family, is to just give it to your heirs while you’re alive. The IRS allows individuals to give up to $15,000 per person per year in gifts. If you’re concerned about your estate being taxable, these gifts can decrease its value, and the money is tax-free for recipients.

Charitable Donations. You can also reduce your estate value, by making charitable donations. Ask an experienced estate planning attorney about setting up a donor-advised fund, instead of making a one-time gift. This would give you an immediate tax deduction for money deposited in the fund and then let you make charitable grants over time. You could designate a child or grandchild as a successor in managing the fund.

Complicated strategies and a constantly changing tax code can make estate planning feel intimidating. However, ignoring it can be a costly mistake for your heirs. Talk to an estate planning attorney.

Reference:  US News and World Report (Sep. 30, 2020) “5 Estate Planning Tips to Keep Your Money in the Family”

Does My Estate Plan Need an Audit?

You should have an estate plan because every state has statutes that describe how your assets are managed, and who benefits if you don’t have a will. Most people want to have more say about who and how their assets are managed, so they draft estate planning documents that match their objectives.

Forbes’ recent article entitled “Auditing Your Estate Plan” says the first question is what are your estate planning objectives? Almost everyone wants to have financial security and the satisfaction of knowing how their assets will be properly managed. Therefore, these are often the most common objectives. However, some people also want to also promote the financial and personal growth of their families, provide for social and cultural objectives by giving to charity and other goals. To help you with deciding on your objectives and priorities, here are some of the most common objectives:

  • Making sure a surviving spouse or family is financially OK
  • Providing for others
  • Providing now for your children and later
  • Saving now on income taxes
  • Saving on estate and gift taxes in the future
  • Donating to charity
  • Having a trusted agency manage my assets, if I am incapacitated
  • Having money for my children’s education
  • Having retirement income; and
  • Shielding my assets from creditors.

Speak with an experienced estate planning attorney about the way in which you should handle your assets. If your plan doesn’t meet your objectives, your estate plan should be revised. This will include a review of your will, trusts, powers of attorney, healthcare proxies, beneficiary designation forms and real property titles.

Note that joint accounts, pay on death (POD) accounts, retirement accounts, life insurance policies, annuities and other assets will transfer to your heirs by the way you designate your beneficiaries on those accounts. Any assets in a trust won’t go through probate. “Irrevocable” trusts may protect assets from the claims of creditors and possibly long-term care costs, if properly drafted and funded.

Another question is what happens in the event you become mentally or physically incapacitated and who will see to your financial and medical affairs. Use a power of attorney to name a person to act as your agent in these situations.

If, after your audit, you find that your plans need to be revised, follow these steps:

  1. Work with an experienced estate planning attorney to create a plan based on your objectives
  2. Draft and execute a will and other estate planning documents customized to your plan
  3. Correctly title your assets and complete your beneficiary designations
  4. Create and fund trusts
  5. Draft and sign powers of attorney, in the event of your incapacity
  6. Draft and sign documents for ownership interest in businesses, intellectual property, artwork and real estate
  7. Discuss the consequences of implementing your plan with an experienced estate planning attorney; and
  8. Review your plan regularly.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

Will a ‘Will’ Really Pay Off?

Wills are often seen as a something that only comes up when an elderly person passes away. Because of this notion, many people think that a will is something they’ll only need to worry about decades from now. However, even young adults can benefit from currently having a will.

The Charleston Gazette-Mail’s recent article entitled “Don’t have a will? Now might be the time to change that” explains that having a will provides you with a layer of security for your family.

The process of drafting a will itself is pretty simple. A person can get a sense of comfort knowing that their final wishes and requests will be known and respected.

The creation of most wills starts with a person contacting an experienced estate planning attorney. He or she will usually send them a questionnaire to complete that asks about the spelling of their names and those of family members, as well as the items and properties they want to list. Once the attorney has that information, the client and the attorney meet to talk about the goals of the client. The attorney will get back to the client in a few weeks with a draft or estate plan. After a review, the client returns to execute the document before witnesses and a notary.

It truly is important for young people to have wills, especially those who are unmarried or have children. If you have young children, your will states the guardians for your children.

If a parent without a spouse doesn’t name a guardian in a will for their child, the court will make a selection.

Estate planning attorneys usually will charge a flat fee for a drafting will. While there are alternatives to the traditional process, going online to find a will-making program isn’t recommended, especially if you have a complex estate. These should be left to experienced estate planning attorneys. However, even for a Regular Joe, most experts say to avoid these sites entirely.

Attorneys can make a lot of money from these do-it-yourself will websites, because they often result in litigation. Some of these websites can cause errors in the drafting of a will. This leads to law firms making far more money than they would have, if the client had simply drafted the will through them in the first place.

Death is an uncomfortable topic for many people. Many people don’t know what options are available, and they’re often scared to ask. However, with COVID-19, people are beginning to realize the importance of a will and a complete estate plan.

Reference: The Charleston Gazette-Mail (Aug. 23, 2020) “Don’t have a will? Now might be the time to change that”

How Important Is Estate Planning in the Pandemic?

Waiting to create a will leaves nothing but headaches for your heirs and relatives. With nearly 200,000 deaths due to Covid-19 in the U.S. alone, we are reminded of how fast our lives can change.

The Street’s recent article entitled “Life Changes Fast: The Importance of Estate Planning and Health Care Directives” also notes that this reminds us how important it is to make sure we have current estate planning decisions and end-of-life decisions in place.

Here is a basic overview of some important areas of estate and health care planning you should consider:

Your Assets and Belongings

An experienced estate planning attorney can help you determine if a will or a trust would best take care of your objectives and needs. Don’t make this decision on your own because there are major differences between these two types of documents.

Some people use a living trust instead of a will because it avoids the publicity and expense that comes with the probate process. Ask your attorney what is best for your family and situation.

You’ll need to name an executor, who will be in charge of making sure your requests are carried out, including the division of assets. In addition to your will or trust, be sure the beneficiaries on your life insurance and accounts, such as your bank and retirement accounts are current. You should also see how the title is held on any real estate property you own.

Health Care and Your Body

Make certain that it’s super clear and in writing as to what your final wishes are for your medical treatment and final arrangements. Your documents need to address what type of medical treatment you want, if you are not able to make those decisions for yourself. It should also be clear as to any specific life-preserving measures you would want taken.

A power of attorney for healthcare lets you name an agent to make health-related decisions for you, if you’re unable to do so. Some states combine both the power of attorney for health care and a living will into one document, which is called an advance directive. If you want to be an organ donor, make sure this is recorded and your wishes are known (some states have directories or it’s on a person’s driver’s license). Be sure that your hospital and doctor are aware of your wishes and they have copies of any necessary documents.

Guidance and Financial Help. Always consult with an experienced estate planning attorney to be certain that your wishes and objectives are properly spelled out and legally binding.

Reference:  The Street (Aug. 28, 2020) “Life Changes Fast: The Importance of Estate Planning and Health Care Directives”

State Laws Have an Impact on Your Estate

Nj.com’s recent article entitled “Will N.J. or Florida’s tax laws affect this inheritance?” notes that first, the fact that the individual from Florida isn’t legally married is important.

However, if she’s a Florida resident, Florida rules will matter in this scenario about the vacation condo.

Florida doesn’t have an inheritance tax, and it doesn’t matter where the beneficiary lives. For example, the state of New Jersey won’t tax a Florida inheritance.

Although New Jersey does have an inheritance tax, the state can’t tax inheritances for New Jersey residents, if the assets come from an out-of-state estate.

If she did live in New Jersey, there is no inheritance tax on “Class A” beneficiaries, which include spouses, children, grandchildren and stepchildren.

However, the issue in this case is the fact that her “daughter” isn’t legally her daughter. Her friend’s daughter would be treated by the tax rules as a friend.

You can call it what you want. However, legally, if she’s not married to her friend, she doesn’t have a legal relationship with her daughter.

As a result, the courts and taxing authorities will treat both persons as non-family.

The smart thing to do with this type of issue is to talk with an experienced estate planning attorney who is well-versed in both states’ laws to determine whether there are any protections available.

Reference: nj.com (July 23, 2020) “Will N.J. or Florida’s tax laws affect this inheritance?”

Should I Let The State Write My Will?

It’s a common question asked of estate planning attorneys: “Do I Really Need A Will?” This article in The Sun explains that the answer is “yes.” If you die without a will or “intestate,” the probate laws of the state will determine who will receive the assets in your estate. Of course, that may not be how you wanted things to go. That’s why you need a will.

When you die, your assets (i.e., your “estate”) are distributed to family and loved ones in your estate plan, if there is no surviving joint owner or designated beneficiary (e.g., life insurance, annuities, and retirement plans). No matter the complexity, a will is a key component of the plan.

A will allows you make decisions about the distribution of your assets, such as your real estate, personal property, investments and any businesses. You can make donations to your favorite charities or a religious organization. Your will is also important, if you have minor children: it’s where you nominate a guardian to care for them if you die.

Of course, you can write your own will or pay for a program on the Internet, but it’s better to have one prepared by an experienced estate planning attorney. Prior to sitting down with an attorney, make a listing of all your assets (your home, real estate, bank accounts, retirement plans, personal property and life insurance policies). If you have prized possessions or family heirlooms, be sure to also detail these.

Make a list of all debts, such as your mortgage, auto loans and credit cards. You should also collect contact information for all immediate living family members, detailing their addresses and birth dates.

When meeting with an attorney, ask about other components of an estate plan, such as a power of attorney and medical directive.

The originals of these documents should be kept in a safe place, where they can be easily accessed by your estate administrator or executor.

You should also review your estate plan every few years and at significant points in your life, like marriage, divorce, the adoption or birth of a child, death of a beneficiary and divorce.

Do your homework, then visit an experienced estate planning attorney to receive important planning insights from their experience working with estate plans and families.

Reference: The (Jonesboro, AR) Sun (July 15, 2020) “Do I Really Need A Will?”

What Basic Estate Planning Documents Do I Need?

AARP’s recent article entitled “Sign These Papers” suggests that the following documents will give you and your family financial protection, as well as peace of mind.

Advance Directive. This document gives your family, loved ones and medical professionals your instructions for your health care. A living will, which is a kind of advance directive, details the treatment you’d like to have in the event you’re unable to speak. It covers things like when you would want doctors to stop treatment, pain relief and life support. Providing these instructions helps your family deal with these issues later.

Durable Power of Attorney for Health Care. This document, regularly included in an advance directive, lets you name a trusted person (plus a backup or two) to make medical decisions on your behalf, when you’re unable to do so.

Revocable Living Trust. Drawn up correctly by an experienced estate planning attorney, this makes it easy to keep track of your finances now, allow a trusted person step in, if necessary, and make certain that there are fewer problems for your heirs when you pass away. A revocable living trust is a powerful document that allows you to stay in control of all your finances as long as you want. You can also make changes to your trust as often as you like.

When you pass away, your family will have a much easiest task of distributing the assets in the trust to your beneficiaries. Without this, they’ll have to go through the probate process.  It can be a long and possibly costly process, if you die with only a will or intestate (i.e., without a will).

Will. Drafting a will with the guidance of an experienced estate planning attorney lets you avoid potential family fighting over what you’ve left behind. Your will can describe in succinct language whom you want to inherit items that might not be in your trust — your home or car, or specific keepsakes, such as your baseball card collection and your Hummel Figurines.

Durable Financial Power of Attorney. If you’re alive but incapacitated, the only way a trusted person, acting on your behalf, can access an IRA, pension or other financial account in your name is with a durable financial power of attorney. Many brokerages and other financial institutions have their own power of attorney forms, so make sure you ask about this.

These five documents (sometimes four, if your advance directive and health care power of attorney are combined) help you enjoy a happier, less stressful life.

In drafting these documents, you know that you’ve taken the steps to make navigating the future as smooth as possible. By making your intentions clear and easing the inheritance process as much as you possibly can, you’re taking care of your family. They will be grateful that you did.

Reference: AARP (August/September 2018) “Sign These Papers”

Should I Write My Will During the Pandemic?

Writing a will allows you to instruct your executor how you want your property to be distributed, when you die. If you have minor children, your will says who will raise them if you die and their other parent is deceased.

The Oakland Press’s article entitled Writing a will today is more important than ever” says that if you pass away without a will, the state will make these critical decisions for you. What the state decides may not reflect your wishes. This may create conflict and stress within your family and cause financial troubles for those you leave behind.

In addition, none of your assets will go to your favorite charities.

A will, and other estate planning documents, are critical because this gives you control over how your affairs are handled when you die. This includes the way in which your assets are distributed and who will take care of your children, if they’re minors.

When you draft your will, it’s important that it’s legally valid. There’s no guarantee that a will prepared without an estate planning lawyer will meet the criteria. If the probate judge doesn’t accept your will, it’s as if you died without one.

As a result, it’s very important that you work with a qualified estate planning attorney to prepare your estate plan. If you don’t, it is possible that your will or other estate documents you purchased online might not meet the state requirements.

Therefore, you’ve wasted money, and your instructions may not be followed. This can mean uncertainty in how your estate is eventually administered, and it can make an already stressful situation even worse for your family.

An experienced estate planning attorney can make sure your will meets the state’s requirements, decreases hard feelings within your family and keeps your family from challenging its validity in court.

If you have a will, consider updating it, especially if a beneficiary listed on the document has died, if you’ve sold your home and bought another, given away some of your possessions, your financial circumstances or the value of your property has changed, or your charity relationships have changed.

You may want to change your estate plan, when your children become adults or if others that were provided for in the estate plan are no longer living.

Reference: Oakland Press (May 16, 2020) Writing a will today is more important than ever”

What Can a Strong Estate Planning Attorney Help Me Accomplish?

The Legal Reader’s recent article entitled “When Should I Start My Estate Planning?” explains that, as we settle down, we should start considering how we’ll provide for and protect those you love.

Talk to an experienced estate planning attorney—one with the knowledge and skill to help you design a workable, legally binding estate plan that will keep your assets safe as they accumulate, protect your spouse and children and consider the possibility that you may become incapacitated when you least expect it.

No matter what your age, the estate planning attorney you hire should have outstanding credentials and testimonials to his/her efficiency and personal concern.

This legal professional must be able to:

  • Listen, understand, and address your individual needs
  • Clarify your options
  • Draft, review, and file all necessary estate planning documents
  • Make certain your estate plan covers all contingencies; and
  • Is prepared to modify your documents as your life circumstances change.

When you see that the future is unpredictable, you realize that estate planning can help you make that future as secure as possible.

Estate planning can be as complicated as it is essential. Accordingly, regardless of our age, speak with a highly competent estate planning attorney as soon as possible.

As the COVID-19 pandemic has dramatically shown us, planning for the unexpected can never be addressed too soon.

Reference: Legal Reader (June 23, 2020) “When Should I Start My Estate Planning?”