12 Months of Estate Planning: A Plan to Get Your Estate Plan Set up in 2020

12 Months of Estate Planning: A Plan to Get Your Estate Plan Set up in 2020

Estate planning can be one of the most important things you do for your family’s future, but it can also be overwhelming. Between heavy subjects you don’t want to think about, the need to do a lot of paperwork, and everything else going on in your life, it can be too easy to keep putting off your estate plan until later. The problem is you never know when you will need it. Get started before it’s too late by doing just a little bit at a time.

January: Determine Your Goals

Who do you need to take care of? Do you have a spouse that relies on your income? Children that still need an education? Grandchildren that you want to give a head start in life? Charities or other important causes that you wish to support?

Your estate plan isn’t a chore you have to check off to be a responsible adult. It’s something you want to do to achieve your goals. There are many types of estate planning tools available that work best in different situations. To pick the right tools, you need to begin with a plan for what you want to do — just like drawing up the blueprints for a house.

February: Take Inventory

After you know who you want to support, you need to know how you can. What assets do you have? Your home? Cash savings? Investments? A business? Family heirlooms?

When you divide your estate, you may wish to provide some loved ones with financial support and others emotional support in the form of specific items that will mean more to them. It’s also important to understand that if you have any debts, your creditors will take precedence over your heirs, so you need to account for those as well.

March: Create a Will

Wills are the most common estate planning tool because they are the simplest way to ensure that each of your loved ones is cared for in the way that you’ve chosen. You can create a will on your own, but there are some legal technicalities that could leave your will open to challenges or having some of your wishes not honored. An estate planning attorney can help you avoid those complexities. Even if you plan to use other estate planning tools, having a will is still a good catchall for things that may not otherwise be covered.

April: Name Beneficiaries

When you name beneficiaries on your bank accounts and investment accounts, those accounts automatically go to your chosen beneficiaries upon your death. This allows those beneficiaries to receive financial support without having to wait for your will to go through probate.

The main benefit to taking this step is so that any family members who need immediate financial support can receive it. For example, if they relied on your income to cover their living expenses, they may not have enough money to buy groceries or to make rent or mortgage payments on your home that they continue to live in.

May: Consider a Trust

A trust is another way to keep assets out of probate and transfer them directly to family members. Again, the goal is to skip the weeks or months of delays it takes to execute your will in probate.

A trust can also be used to ensure that the funds you leave go towards your intended purpose. You may leave a trust for your spouse’s living expenses or your children’s schooling. You may also restrict your children’s or grandchildren’s access to their inheritance until they are older and wiser and will hopefully put it to good use.

June: Plan for Your Healthcare

In addition to planning for what happens after you’re gone, you also need to have plans for what happens if you can’t make decisions for yourself while you’re hospitalized for a serious accident or illness. Even in close families, family members may disagree about what you want, and doctors may not be able to legally follow their instructions.

To ensure your wishes are honored, consider a living will, advanced healthcare directive, or medical power of attorney. These documents allow you to designate a trusted loved one to make decisions on your behalf with full authority. You can also include any specific treatments or end-of-life options that you want your agent to request on your behalf.

July: Designate a Financial Power of Attorney

Like the person you select to make your healthcare decisions, your financial power of attorney will step in if you’re unable to manage your finances. A full durable financial power of attorney gives your agent the ability to manage your bills and assets if you’re ever temporarily or permanently incapacitated.

You can also use a financial power of attorney when you’re still able to care for yourself to some degree but need extra help with certain tasks. For example, you might sign a limited scope power of attorney allowing a loved one to manage your checking account and pay your bills.

August: Look Into Life Insurance

Life insurance is another tool you can use to provide for your family financially when you’re unable to. Many working people opt to buy a policy large enough to replace their expected future income to protect their spouse’s and children’s lifestyles that were planned around that income. You can also use life insurance to guard against things like medical debts from reducing what you can leave to your family.

As with your other assets, you will need to name one or more beneficiaries in your life insurance policy or provide for the cash value of the policy when you write your will.

September: Plan for Estate Taxes

Estate taxes generally only affect families with multi-million dollar net worths, but you still need to be aware of them. Estate taxes can be particularly devastating when your net worth is mostly in real estate, a business, or other non-liquid assets. This type of situation often forces a family to sell a treasured home or multi-generational business to pay the tax bill. By planning how you structure your estate ahead of time, you can avoid taxes or at least make sure your family will have the ability to pay them.

October: Protect Your Business

In one sense, a business is like any other asset. You can leave it in your will to a loved one, or it can be part of your general estate to be divided up between your heirs.

However, businesses also have to be maintained if they are to continue to provide for your family. The death of an owner or key employee can be highly disruptive to the business and possibly even put it out of business. You should create a succession plan that provides for continuity of operations no matter what happens and that also gradually prepares your loved ones to follow in your footsteps if that’s your goal.

November: Organize Everything

Your estate plan is no good if no one knows about it to put it into action. Keep all of your important documents together in a fireproof safe that your family knows the location of. You may also wish to leave copies with your attorney or in a bank safe deposit box. Again, tell your family.

When you have a medical power of attorney or financial power of attorney, give copies to your doctors or banks in advance. Don’t forget to give them updated documents if you change or cancel your existing plans.

December: Review Everything Each Year

When you stop to reflect on another year gone by, think about how the changes during the year will affect your family’s future. New children may be born, others may grow up and no longer need as much help, and you may have new wealth to consider. While you don’t need to redo your estate plan every year, you should update the relevant portions of it after major life changes so that it continues to meet your goals for your family.

Estate Planning with Lilac City Law

Lilac City provides a full range of estate planning services and can help you develop a comprehensive plan for you and your family. We can help you put it together over the next year or help you get it done even faster. To learn more, contact us now to schedule a consultation.

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Disinheriting a Child and Other Considerations of a Last Will and Testament

Disinheriting a Child and Other Considerations of a Last Will and Testament

Leaving your children out of your will is not a decision that is taken lightly. But sometimes there are considerations that you need to make that make it the more prudent decision to leave them out of your will. If you decide to disinherit children, it is something you should do as soon as you make the final decision, which will give them less of a chance to contest it and end up with an inheritance you didn’t want them to receive. 

Things You Should Consider Before Choosing to Disinherit 

You should never use disinheritance as a tool for controlling your child’s behavior. Trying to control a person or situation with money can often lead to bad feelings and bad blood. While there are valid reasons for wanting to disinherit your child, you might want to look at the other possible options first to see if they could be the right fit before choosing to cut your child out completely. Other options you might want to consider before disinheriting your child include:

Controlling Their Inheritance Through the Use of a Living Trust

If you want to allow your child to have money but control how and when they get it, or what they use it for to ensure it is used responsibly, a living trust may be the better option. You can set up a trust to divvy out the money in small amounts over a period of time or have the funds directly sent to pay bills. You will need to provide the trustee with precise instructions on how, when, or for what the distributions can be made. This may be the ideal option for those who are considering disinheriting for fear of the money being wasted. These trusts can even include milestone incentives such as payments for going to college. 

Providing the Power of Appointment to Someone Else

You can also choose to provide a trustee with the power of appointment, which can allow your child to re-inherit if they meet certain terms or conditions. This means that the child will have the right to earn their portion of the estate back as long as the trustee of a lifetime trust is given the instruction to allow this to happen. 

How to Write Your Children Out of Your Last Will and Testament

Following a few simple steps can make disinheriting your child a little easier and help provide the best chance for your last wishes to be followed. You will need to:

1. Create a Will

While this sounds simple, many people may communicate their last wishes to family members, but not put the information formally down in writing. Failing to have a will in place means that your estate will pass through intestate succession upon your death. When this occurs, the estate will most likely split up between a living spouse and children. Once you have drafted a will, make sure that it is witnessed and notarized. Then place it in a safe place where the person in charge of executing your estate will have access to it. 

2. Indicate the Deliberate Disinheritance of the Specific Child or Children

Just not mentioning the child can leave the will open for interpretation and subject to being contested. The disinherited child could claim you forgot to put them in, and since they were omitted and not explicitly listed as being disinherited, it may give them a chance in the court system. Acknowledge the specific child or children by their name in your will and add a statement saying that for certain reasons, you have decided to make no provision for them or their descendants in your will. This will provide the support that you had intentionally meant to leave them out of the estate split. 

There are two things that you will need to consider when wording this in your will. First, leave the reason vague, such as “for reasons known to me.” If you state a reason, you open the door for the child to say that that reason is no longer valid. For example, if you said the disinheritance is because they have finances to meet their needs, they could prove that they no longer have the money to keep themselves financially stable. You also never want to leave a child an amount that basically amounts to leaving them with nothing. Doing this will give your child access to the estate information without having to file a request with the court. 

3. Inform Them of Your Decision

It is always best to not make this a surprise that a child learns upon your death. While this can be awkward, it will make the process smoother as they will have more time to get over the initial frustration if there is any and not make any hasty decisions without thinking it through. This is especially important if your other children will be receiving money. It can reduce the chance of the will being contested and bad blood to develop between siblings. The one case where informing your child will not be necessary is if you have been out of contact with them for a significant amount of time. They are likely not to be shocked about not being included in the will at this point. 

4. Update Your Will if You Reconsider

Things may change over the years since you have written your will, and the child’s circumstances may have changed as well. If you decide that you want to put them back in your will, be sure that you update the will as soon as you reconsider. If there is no amendment to your will, it is likely the original intention will stand, and your child will not have a claim to any of your estate. 

Common Challenges for Contesting a Disinheritance in a Will

When adult children contest a will, they will usually use one of three main challenges. Knowing what these challenges are will better help you to understand how to handle your will to provide the best defense against the challenges. The common challenges include:

Undue Influence

A challenge of undue influence may be presented by a disinherited child if they feel that the disinheritance was swayed by another party. This means the contestor felt that the testator was under pressure from someone outside of the natural heirs to cut them out of the will. Undue influence often occurs when a third party threatens force or embarrassment to the testator if they do not comply with their requests. For this type of challenge, there is no need to prove the mental state of the testator when they were writing their will but instead show that they are likely to have made a different decision if they were not under the influence of the other person to sign the will. Though the contestor will likely need to have either medical or psychological records, as well as witness testimony to show the influence on the testator. 

Lack of Capacity to Create a Testament

Under this type of challenge, it is alleged that the testator did not have the mental capacity to make the will. Contrary to what many people may think, this challenge is not easy to prove. The court requires substantial evidence to confirm that the testator was not of sound mind when they drafted the will. Time also makes this challenge difficult, because if the will was signed many years before, the court would require medical evidence from the time that the will was signed, that the testator lacked mental capacity. Lack of capacity can be even harder to prove if the will was signed in a lawyer’s office since they are extremely cautious about a testator’s mental state when signing any documents. 

Improper Execution

If you are drafting your own will, there is a possibility that your disinherited child could challenge it based on improper execution. There will be specific laws to follow depending on the state you file in, but most of the time, you will need to be at least 18, of sound mind, and in the presence of two witnesses who have no financial interest in the will. The witnesses must be in the presence of the testator, and all must witness each other sign the document. You can lessen the likelihood of a challenge of improper execution by speaking with an experienced legal service to ensure that you have followed the protocols required by your state.

Disinheriting a child from your will is not a difficult process, but one where legal advice may help make the process smoother. If you are unsure of the requirements for executing a will in your state, contact a legal service to ensure that you have everything completed and filed properly to ensure your final wishes are fulfilled in the want them to be. 

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The Importance of Power of Attorney During Estate Planning

The Importance of Power of Attorney During Estate Planning

Your estate planning has many different parts that all need to move in the same direction in order to be successful. A vital part of this process is how to disseminate the various powers of attorney (POA). The POA will be one of the most important estate documents that you create, so you owe it to yourself to know as much as you can about it. Let’s take a look at just how important the POA is and how it will be used during the estate planning process.

What Is the Power of Attorney?

The power of attorney is the power to organize affairs on your behalf. There are different powers of attorney for different aspects of your life. For the purposes of this text, we will focus most on the financial POA, but there are also medical POAs and others that may apply during the estate process depending on circumstances.

In most cases, a power of attorney becomes effective immediately upon document execution. Contrary to popular belief, powers of attorney are not only for when a person becomes mentally incapable. In many cases, the POA document does not completely remove the power of the principal to manage their or her own affairs. The document simply grants the agent the power to act in place of the principal if needed. If the principal remains mentally competent, he can change the POA by replacing the agent or revoking the power totally.

However, the POA document truly becomes the most important document in the estate planning portfolio if a principal becomes somehow incapacitated or otherwise unable to handle their own affairs.

What Happens Without a Power of Attorney in Place

If a principal becomes incapable of handling their own affairs and has no power of attorney document in place, the family of the principal faces a potentially contentious situation. The POA document is the document on record of the wishes of the principal. Without it, there is no direct claim to the finances that the principal was in control of. Family members may begin to fight over the right to control things, especially if the estate is especially large or there are many valuable assets to consider.

In place of a designated person with the powers of attorney, the affected parties may agree to file for guardianship of the assets and property of the principal that has been disabled. Instead of simply following the wishes of the principal as mapped out in the POA, the family must now go through an often long and drawn-out court procedure.

The Process of Guardianship

During the court process of selecting a guardian, there will usually be a lawyer who is representing the Petitioner. The Petitioner is the individual who is looking to be named as the guardian. The Petitioner and their attorney will need to face, at the very least, an attorney who is in court to represent the rights of the person who has been disabled. No matter how close the family is, this process will likely generate thousands of dollars in legal fees in order to legally appoint the guardian.

Keep in mind also that a power of attorney document that is not clear may trigger this contentious process as well. You need to have the right attorney with the right experience in order to avoid these problems — just having a POA document that is not appropriate for your situation is not enough. A properly drafted power of attorney directly from the principal, while he is competent, is always preferable to a guardianship court proceeding.

Even when a legal guardianship is in place, the court maintains a Big Brother stance over the guardian to supervise the administration of the estate. Guardians are much less free to manage an estate than someone who is appointed through a power of attorney document. Guardians must always get the permission of the court to legally undertake many important assets that involve the estate, including paying the attorney’s fees for the procedure itself.

The court will also require that a guardian file an accounting of the estate on an annual basis. On top of this, a guardian must also file an inventory of the estate so that the court knows every activity that is taking place within the family estate. Having to report everything to the court undermines the very nature of a private estate, and it is much more expensive than a power of attorney transfer of responsibility. In most cases, the oversight of the court means that a family must employ more legal services in order to stay in compliance with regulations.

If you are in this sensitive situation, we can help you through it no matter who you may be up against. Do not hesitate to call us if you believe you have a legal claim to the estate of a family member who has been recently incapacitated.

Having an Effective POA

As mentioned before, the power of attorney that is set up by the principal must be well-drafted and relevant to the current situation. Otherwise, the court may trigger the guardianship process and all of the expenses and legal hassle that comes with it.

What makes a POA document effective during estate planning? Let’s take a look at the characteristics of an effective power of attorney.

  • Listing specific powers and limitations. A good power of attorney will list out the specific actions that an agent can take on behalf of a principal. Among these actions may be paying bills from the principal’s assets; managing those assets; selling all or part of the estate; and setting up various structures to avoid estate taxes. A principal may wish their estate to be used in a very specific way, and this is what the power of attorney should spell out in clear terms.
  • Language in the POA to persuade financial institutions to accept an agent. The financial institutions that did business with a principal are under no requirement to accept an agent, even from a properly worded POA. Many of these institutions now require language that is very specific in the POA to reaffirm that there is no funny business going on. Agents should also be prepared to reaffirm their responsibility, possibly on the financial institution’s proprietary forms.
  • Listing consolidated accounts. As a principal, if all of your accounts are kept spread out, your agent will have a tough time jumping through all of the hoops of the financial institutions want. Every bank is different. Consolidating accounts as you age not only helps to organize your family finances in the estate, but it also makes it easier to manage while you maintain control over them. You may want to list all of these accounts by name in the POA so that each financial institution can be more assured of your agent’s viability.
  • Decide on the type of POA. There are two major types of POAs that you can consider: the springing POA or the durable POA. The durable POA gives the power of attorney as soon as the principal signs it. The springing POA only takes effect in the event of a certain condition, such as the death, disability or incapacity of the principal. The timing of agent powers is a vital part of a POA. Without it, an agent may try to take over a principal’s estate too early and cause contention. Keep in mind that not all states allow springing POAs.
  • Define the conditions of incapacity. The last thing that you want is for someone else to determine when you are incapable of managing your own affairs. In your POA, you can name a medical professional to certify that you are incapacitated before your agent can take any action on your estate. This puts an added layer of protection in your POA, and it also gives your agent a good check against absolute power while you are still capable.
  • Establish oversight. Although your agent may have power of attorney, you can limit this right with certain oversights. The key is to make sure these oversights are written down specifically and fully clear to your attorney, to your agent, to the overseer and to anyone else who is involved in your estate.

Get Help with Powers of Attorney Today

The points above are just a few of the important aspects of the power of attorney document during estate planning. Every plan is different based on the individual needs of the estate. Make sure that you have the right attorney by your side when it is time to draft this essential document. Give us a call or an email with any questions that you may have about the process, or to get things started with your own POA. Time is of the essence, and there is no better time than now to get your affairs in order.

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Maximizing Tax Umbrellas for Estates

You have made it your life’s work to leave your family with substantial assets to provide for them after you are gone. Legacy is extremely difficult to build, but the estate tax law in the United States does not seem to take this into consideration.

Estate tax can rip as much as 40% of your family’s assets from them, depending on the value of your estate and its location in the country.

Right now is the time to protect your estate from federal and state taxes. If you take the time to create a well thought out plan, you can protect a great deal of the wealth than you have earned for your family.

Here are some powerful tips that you need to know.

Knowing Whether Your Estate Will Be Taxed

Estate taxes are not the same everywhere. Depending on the state you reside in, you do not have to be ultra-wealthy in order to be harshly taxed. Federal estate taxes have a minimum threshold that is in the million-dollar estate valuation, but states like Washington or Idaho can very easily tax middle-class families. If you are leaving behind any sort of investments, bank accounts, businesses, property or life insurance packages, the estate tax applies to you regardless of the size of that asset.

Also note, valuation is often subjective, and it is a discussion you should have with your estate planning attorney.  When it comes to estate taxes, you do not know whether the state will try to value your real estate or businesses higher than other sorts of appraisals – you should not leave it up to them to determine a fair valuation.

Geography is also something to take into account – if you live in a premium real estate location, just a couple of properties can push your entire estate value through the roof.  Sometimes this comes as a big surprise to the family after the passing of a loved one.  For example, the children of farmers often find themselves stuck with huge tax bills upon the death of a matriarch or patriarch because of the hidden value of the land on which the farm sits.

Providing Gifts and Charity the Smart Way

If you reduce the value of your estate through gifts to your children and grandchildren, that value cannot be counted against you for estate tax purposes. Every year, individuals save on the estate tax bill by giving away tens of thousands of dollars to their loved ones.

Moreover, making donations to charitable organizations is another great way to reduce your estate tax bill. These donations may also have an additional tax deduction attached to them. Donating to charity is a great way to ensure that the money you earn is used in the way that you prefer after you are gone.

Consult with your lawyer to learn how to maximize this benefit for your present taxes, as well as the ones that will impact your family after your passing.

Knowing When to Use Your Estate Tax Exemption

Everyone has a large (multimillion-dollar) tax exemption for estate taxes that can be used at any time, not only at the time of death. Knowing how to use the exemption can be an essential tool for reducing a tax bill before passing an asset on to a child.

So, what exactly is the estate tax exemption? Let’s say that you have an asset or an account that you expect to grow exponentially in the coming years. Right now, the value of that business is less than the estate tax minimum. In the future, you expect it to grow beyond this exemption. (In most cases, this type of asset will be a business.) Because you can use the lifetime exemption at any time, if you give away the business to a child or grandchild before it passes above the estate tax minimum limit, there will be no estate tax on the asset when you pass on.

Using a Trust Structure for Your Most Important and Valuable Assets

Establishing a trust is one of the best ways to avoid big out of pocket estate tax payments. Many people may hesitate at the idea of handing over large chunks of assets to others inside of a trust. However, the rules say that the person managing a trust can be a trusted family member, or even yourself.

A trust is one of the most sophisticated tax umbrella structures available to individuals. As such, it requires careful planning and coordination of care to establish & employ correctly. The type of trust that you choose can also make a difference.

If you are serious about preserving your legacy, it is essential that you craft your trusts with the right legal help.  

Using Life Insurance to Protect Your Assets

First, this is not financial advice.  However, life insurance is a conversation we often have with clients and there are certainly a lot of tie-ins to your insurance policies and a healthy estate plan. 

Some of the best life insurance policies, for high net worth individuals (HNWIs) for example, may include provisions for paying off any estate taxes that are due at the time of death. To enable this kind of benefit, you might want to, again, set up a trust.  Regardless, these financial maneuvers and plans should be discussed with your estate planning attorney. 

In short, using life insurance smartly is a great move for HNWIs who would be concerned about the effects of estate taxes on their heirs inheritance(s).

Additional Items to Consider Regarding Your Estate Taxes

Now that we have gone over a few strategies that you can employ to shield your assets from estate taxes, let’s go over a few things that you need to know so that you can go to your attorney as informed as possible.

  • A relatively new tax law (The Tax Cuts and Jobs Act) allows you to give away slightly over $11 million over your lifetime in gifts that will not be taxed subsequently on your estate. This law will only last until the end of 2025. After that, it will fall back to $5 million, meaning that anything more that you give away may get taxed by the IRS starting in 2026.
  • If you are able to get your gifts to your loved ones before 2025, the United States Treasury and the IRS are likely to allow those transfers to stay as tax-favored gifts.
  • However, depending on your situation, using the “step-up” basis may actually save your family more money. The step-up basis allows an asset to be valued at its cost basis at the time of passage rather than at the time of acquisition. Stepping up the cost basis wipes out any paper profit the asset may have generated in the past, reducing the basis for the estate tax.

What Is the Answer? Get the Help That You Need Right Now.

We are here to help you with properly managing and maximizing the tax umbrellas available to you for your estate.

Protecting your estate is an ongoing responsibility – one that will require experienced legal assistance for the entire process of establishing your estate plan and modifying it over the coming years and decades, as necessary.

If you are ready to protect your hard-earned lifetime work, contact us today!

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Revocable vs Irrevocable Trusts: What You Need to Know

As you move into the latter stages of life, you want to know where your resources will end up when you pass away.

Setting up a trust is an extremely common way to do this, and it can help ensure that your life’s savings will end up in the right hands.

Here are a couple of types of trusts you should know about, revocable and irrevocable trusts.

Revocable Trusts

A revocable trust is one that is changeable after it is made. Being able to change a provision or two in your trust might be a good option if you have any serious relational issues with your beneficiaries. 

Additionally, you can decide to entirely rework the trust if you find that its provisions are not the way you would like them to be later in life. A large positive for people who choose a revocable trust is that you can adjust if your mental health suffers in old age. 

This is a concern for many people. If you have a specific illness already, or your family has a history of mental decline in old age, you may want to consider a revocable trust. That way, you can pass your assets on to a trusted beneficiary when the time comes.

Finally, revocable trusts do not require probate. Probate is essentially the process of bringing your beneficiaries to court and verifying the dispersion of your estate. If you would rather not put your beneficiaries through those legal proceedings, a revocable trust will not force you to. 

Irrevocable Trust

An irrevocable trust is one that is not changeable after it is made. So, once the grantor has finalized the paperwork, you cannot change it.

That means forever, so make sure to choose wisely. There are a few ways that people use irrevocable trusts in order to benefit themselves in other ways. 

One of those ways is an estate tax reduction. Removing the value of your property from your estate by issuing an irrevocable trust can help your beneficiaries avoid paying taxes on property when you pass. 

Additionally, placing assets into an irrevocable trust essentially sets them aside from the hands of creditors and the like. In this way, your assets are still passed down to your family when you pass and they are not liable to be used in any way other than is listed in the trust. 

This is because, in a sense, one gives up ownership of assets when they place them into a trust. Those assets are held unconditionally until the grantor passes, at which time those assets will be granted to the beneficiary.

Want to Learn More about Revocable vs Irrevocable Trusts?

Understanding revocable vs irrevocable trusts is essential if you plan to use one of them in securing your assets. There is a lot more to learn that is not listed in this article, though. 

Visit our site to learn more about planning for your estate. 

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It has Been Awhile: The Top Signs It Is Time to Update Your Estate Plan

Are you thinking about updating your will? Have you had some big lifestyle changes that may affect your future finances? Have you always had a will but not kept up on updating it as your life has changed?

If you have answered yes to one or all of these, it may be time to change or update your estate plan

Keep reading for some more detailed reasons why your will might need to be changed. 

Your Relationship Status has Changed

In this day and age, a person’s relationship can change a lot about their lifestyle. 

One of the biggest reasons to update your will is if you have had a drastic change in a relationship. This could range from getting married, getting a divorce, to losing a spouse.

Marriage

Making sure your will and estate plan reflect the relationship(s) you are in is very important. If you have recently gotten married, keep in mind that a new spouse does not necessarily have to inherit everything should you pass, but it may be important to you to make sure they are reflected in your new will.

Divorce

On the same hand, getting a divorce makes updating a will essential. Make sure you speak with your estate planner after a split and discuss all options for removing an ex from your estate documents. 

Widowhood

Losing a spouse is hard. If you become widowed, you may inherit from them. This means that inheritance must be reflected within your new will or trust. 

You Have Had a Child

Growing your family will reflect on your estate as well. If you are thinking about having children make sure you speak with an estate planner about how this will change your will.

Once you have had a child, making sure they are added to your will is important. Updating it each time you add a new member to your family will also guarantee should the worst happen that they are well cared for in the future. 

You Have Changed Jobs

Sometimes a job change will affect your estate. A significant pay increase or a job loss should be reflected in any will you have drawn up. Make sure you speak with your estate lawyer any time a job change occurs. This will keep your finances safe in the future. 

It is also important to keep in mind that estate laws are not universally recognized throughout the country. An estate law in California will not be the same as in Washington state.

If you have moved to another country you may have to change your will accordingly. Contact an estate planner immediately once you have settled in a new home.

You Now Own Property

Nothing changes your life more than suddenly becoming a homeowner. This is a significant financial change that will need to be taken into consideration when you are redrafting your will. 

You will need to figure out how to pay it off should you pass. It will also need to have a set inheritor that you must document carefully. 

Update Your Estate Plan Today 

If you are thinking about big lifestyle changes, it may be time to create a detailed estate plan.

Having a will or plan will ensure your finances are well taken care of after you die. Making sure you work with a professional estate planner will further guarantee your affairs are set in order. 

From marriage to children to owning a home, your life can change at any moment. Having a will that is up-to-date on those changes will give you the peace of mind you need. 

Visit our blog if you’d like to learn more about how estate planning can affect your daily life. 

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Five Signs it is Time to Update Your Estate Plan

It is estimated that 58 percent of the baby boomer generation (those between the ages of 53 and 71) have an estate plan in place.

However, once created, many people do not realize that updates may be needed from time to time.

As a person ages and their situation changes, it may also be necessary to update their estate plan.

Do you know when it is time to make these changes?

If not, do not worry. You are not alone. You can learn when it is time to update these estate plans here.

Some Type of Major Life Event Occurs

Has some type of major life event occurred? Do you even know what this is? All of the following would be a major life event:

  • Someone gets married
  • Someone gets divorced
  • Someone is born
  • Someone dies

While the total list is much more extensive, this gives you a general idea of when you may need to update your estate plan. If you are not sure if what you have experienced is a major life event, then it may be a good idea to ask your attorney.

Your Financial Situation Has Changed

Regardless of if you have received some sort of windfall, received an increase in your pay, or have even lost your job, it is important to consider if the change is going to impact your estate plan.

Any significant financial gain or loss will likely require you to update your estate plan to reflect this change.

You Have Experienced a Significant Asset Change

If you move to another state, then it may be necessary to update the documents for your estate plan so you comply with the laws in that new state. It may also need to be changed so you can take advantage of any differences in the law.

If you own a business, a change in control or sale may affect your estate plan. If you currently sell real estate and move the proceeds into an investment account, then beneficiary designations may wind up impacting what passes through your estate.

While this is a short list, it gives you an idea of what to watch for. If you sell or purchase something of significant value, change the nature or status of an investment, updating your estate plan is a good idea.

It Has Been Over Five Years

Time can slip by pretty quickly. You may not even realize how much time has passed since you initially created your estate plan.

It is a good idea to review your plan regularly to ensure no changes need to be done.

Is it Time to Update Your Estate Plan?

If you are not sure whether or not it is time to update your estate plan, then it is a good idea to talk to an attorney. Keep this updated will help ensure that your wishes are adhered to after you pass away.

More information about creating and updated an estate plan can be found by contacting us at Lilac City Law. We are here to help with all of your end of life planning needs.

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Three Reasons Why Millennials Need an Estate Plan

If you are younger than 45 or 50, you may not think you need to worry about estate planning. That is something you do when you start thinking about retirement, right?

Those of us who are young and healthy have our whole lives ahead of us and plenty of time to worry about things like that later.

But the unfortunate truth is no one knows when something might happen to change their plans. Cars crash, people get sick, and sometimes young people die long before their time.

If you are on the fence about starting your estate plan, read on to discover three reasons why you should not put it off any longer.

To Protect Your Children

As millennials start heading into our thirties, many of us have children or have babies on the way. It may seem crazy to start thinking about your own death as soon as your child is born, but it becomes a much more pressing issue at that point. If something were to happen to you, who will take care of your child?

Setting up a will can help make sure your kids are taken care of if you or your partner pass away. Without one, they may go into the foster care system or wind up bouncing from relative to relative as a court sees fit. Some places offer family-friendly estate planning events, so there is no reason not to set up a plan to protect your kids.

To Control Your Health Care

One of the biggest advantages of having an estate plan in place is it allows you more control over your health care. Under normal circumstances, of course, you have a say in what medical treatments you do or do not get. But if you are in a coma or otherwise unresponsive or incoherent, that control will go away.

Having a plan in place can make sure your wishes are respected when it comes to your health care. For example, maybe you hold the view that you would rather die peacefully than stay on long-term life support or live with a debilitating brain injury. Having those wishes down in writing ahead of time can save your family (and yourself) a lot of heartaches and legal battles.

To Give Your Partner Rights

By this point, you may be saying, “Well if any of these things happen, I trust my partner to make the right decisions for me.” And while that is a wonderful thing, what happens if your partner does not have legal rights to make those decisions. Believe it or not, sometimes a person’s partner is not assigned as their power of attorney, especially if you are not married.

If you want your partner to be the person making the decisions if something happens to you, you need to have that down in writing. You can give them the authority to do everything from managing your health care choices to taking care of your children. Giving your partner authority will save a lot of legal battles and the risk that your wishes are not respected if you are not there.

Get Started on Your Estate Plan

Estate planning can be a somewhat morbid business; after all, no one likes to think about their own death. But it is the best way to ensure that if something does happen, your wishes and your loved ones are protected.

If you are not sure where to start the estate planning process, visit the rest of our site at Lilac City Law or contact us using the form below. We provide family estate planning to help you get your affairs in order so you can enjoy your life worry-free. Contact us today to get started on your estate plan.

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Top Three Advantages of a Living Trust

We cannot avoid death, but we CAN plan for it.  That said, only 60% of Americans have made a will or living trust to help those they leave behind.

When it is time to complete your estate planning, give strong consideration to creating a living trust.  A living trust provides for distribution of your assets according to your instructions.

But what other reasons are there for choosing a living trust for asset distribution?

That is the subject of today’s article as we reveal the three biggest advantages of a living trust.

A Living Trust Avoids Probate

The most significant advantage of a living trust is that it enables your estate to “bypass” probate

Probate is the court-supervised process that allows for the dispersal of your assets according to your instructions by your executor.  All wills must go through probate, a process which can take several months or even years.

A living trust, on the other hand, is not subject to probate.  As such, your family only has to wait for a few weeks to receive any death benefits, saving them considerable time.

Your successor trustee must pay your debts and distribute your assets as you wish.

A Living Trust Maintains Your Privacy

A will is a public document.  That means the information contained in your will is a matter of public record.  Anyone can search public records to find out about the distribution of your assets.

A living trust, on the other hand, is a private document and the information therein remains private.  A living trust is strictly between you and any parties involved, and your estate is distributed in private.

A Living Trust May Save Money

While creating a living trust may cost more than drafting a will initially, upon your death it may save your survivors considerable money.

When you set your living trust, the first thing you must do is fund the trust.  In other words, you need to transfer all your financial accounts and certificates to the trust through legal documents.

Other items must be considered as you establish a succession plan for your estate.  You’ll need to change the beneficiaries on any life insurance policies to your trust.  You will also need to make arrangements for your IRA or 401k plan.  

Finally, you must create a pour-over will which provides instructions for assets which are acquired between the time your living trust is created and your death.  A pour-over will also covers assets you may have overlooked or excluded from your living trust.

As you can see, there is some initial time and money that must be invested in the creation of your living trust. 

However, your survivors will be grateful for your efforts because it will likely save them time and money.  Your assets will not be subject to probate and they will be able to settle matters in considerably less time. Probate costs are taken from the will, something your heirs can avoid with a living trust.

Advantages of a Living Trust: The Bottom Line

Remember, planning for the distribution of your estate is a gift to your loved ones.  It relieves some of the pressure during a difficult time by providing clear instructions for the distribution of your assets.

Young couples with no children or those with a small estate may benefit from a simple will.  However, if you have assets and wish to pass them on to your heirs, you may wish to enjoy the advantages of a living trust.

If you found this article helpful, please check out more of our estate planning content. Or contact us, below!

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The Importance of Insurance In Estate Planning

About 84% of Americans believe that it is important to have life insurance. But only 41% have any. That’s quite a disparity!

Where do you fall in this equation? Do you have the life insurance that you need?

We’re assuming here that you have already taken a big first step and are working on your estate planning. If so, you need to understand the role of life insurance.

Life Insurance Helps Care For Your Kids

Perhaps one of the most important roles of life insurance is ensuring that your kids or other dependents will be taken care of if something happens to you or your spouse. Depending on where you are at in life, your death could spell financial disaster for your dependents.

A life insurance policy helps address these potential disasters by providing necessary and timely funds for various reasons and uses. For instance, your dependents might use life insurance benefits in place of your lost wages, to pay for college, or to pay off debts.

Life insurance is also especially useful if you have a special needs child. This child may need financial support for many, many years after your death. We all wonder what will happen to our children, but with special needs children, you mainly want to make sure they are set up to be taken care of as they age.  

Usually, these insurance benefits are paid out in a lump sum. But you may have concerns about the fiscal responsibility of the person receiving them. In this case, you can set it up so that the benefits purchase an annuity that would pay out in installments over time.

Life Insurance Can Help Keep Your Estate Intact

As the old saying goes, nothing is certain but death and taxes. And death comes with its hearty share of taxes.

A small estate is defined as those valuing less than $2 million per person. In these cases, death taxes are not too much of a concern as they will not be very high; however, if your estate is more substantial, life insurance plays a valuable role in ensuring there is money to cover any death taxes that may be levied against your estate.

Taxes and debts can erode the value of your estate drastically. Life insurance helps ensure that there is money to cover these unexpected expenses while keeping your estate intact for your heirs to enjoy.

Life Insurance Could Help Cover Probate Fees and Other Costs

Depending on the size of your estate and how complex it is, there can be other costs associated with passing it on after your death. One of the most common costs is probate fees. Probate is the legal process of validating your will and executing it according to your wishes.

There also may be estate administration costs. Plus, the inevitable costs associated with your burial and funeral. Again, life insurance benefits could conceivably cover all of these.

Do You Need Estate Planning Life Insurance? 

If you’re wondering whether you need life insurance as part of your estate plan, contact us.  We will walk you through all your options today and get you set up for financial happiness tomorrow. 

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