Many people understand why young adults and minors should not inherit property outright. Someone with the experience and maturity must be able to manage the assets and make critical spending decisions but it can still be a mistake to leave assets outright to adult children.
Overlooking the benefits of leaving assets inside a trust for adult children is a major mistake that you can make in the estate planning process. There are risks associated with leaving wealth outright, even to grown children, and major benefits associated with using an inheritance trust instead.
Getting to a particular age doesn’t mean that someone has the financial skills to handle a windfall of money. The level of financial acumen associated with managing a large inheritance increases just as someone’s age does. Limiting annual distributions to only a percentage of the trust value or only an investment income is one popular strategy for accomplishing your goals with an estate plan that uses trusts to pass on assets to adult children. You can also take advantage of some tax benefits by having a plan put in place well in advance by an experienced estate planning lawyer in Virginia.
The new estate and tax changes currently in place at the federal level indicate that people are taking a hard look at their financial and estate plans. The gifting and estate tax exemption is up to approximately $11 million per person, which is double the levels under the previous law.
A recent study completed by the American Institute of Certified Public Accountants showed that more than 60% of wealthy individuals intended to tweak their financial planning strategies. Those classified as affluent adults who are included in the study were those who has at least $200,000 in household income or $250,000 in investible assets.
The critical changes in the Tax Cuts and Jobs Act include the elimination of personal exemptions, major changes to itemized deductions, and the doubling of the standard deduction to $12,000 for singles and $24,000 for married couples who feel jointly. Tax planning should always be a priority for anyone even in the most basic of estate planning situations.
The right lawyer can help you clarify whether your current estate plan addresses your primary concerns and how to develop a strategy with your best interests in mind.
Estate planning can often seem overwhelming for someone who is already involved in all of the various aspects of running a busy company. However, entrepreneurs and in particular, young entrepreneurs need to be mindful of how to engage in the estate planning process appropriately.
Estate planning and business succession planning, in conjunction with asset protection planning as the wealth of the entrepreneur and the company grows, are crucial components of having a long-range vision. Frequently, entrepreneurs are visionaries and dreamers but leave out the day to day aspects of conducting appropriate estate planning.
There are several different steps that can make this process easier and to ensure that the individual as well as the company’s needs are represented in appropriate estate planning documents and strategies. These include:
- Evaluating the current financial situation looking at professional income, debt, personal overhead, and any savings already accumulated.
- Identify a clear set of goals, including what you intend to accomplish in coming years such as spending more time with your family, expanding the business, traveling to destinations or building your dream home.
- Design a course of action that is in line with your current situation and your long-term goals. A game plan should be generated for every individual goal.
- Implement your game plan by deciding on specific actions that can help you achieve your vision.
Young entrepreneurs can dramatically benefit from the advice of an experienced lawyer in VA Beach.
Although it can be difficult to come to terms with the management of your estate and family members that you wish to disinherit, using your will to settle a score and leave in specific clauses that make things more difficult for your loved ones is not always recommended. If you do desire to disinherit someone in your will, there are ways of doing this without adding fuel to the fire.
Your will is an opportunity to bring order for what can be a confusing and difficult time for your family. The moment can be further complicated if you take one last swing by trying to settle a score.
People will get the picture when you intentionally disinherit or acknowledge them. It’s not easy to approach the process of estate planning when there are numerous challenges and difficult family situations involved, but a tactful estate planning attorney can help walk you through this process in a way that accomplishes your goals without making things work.
If you have final issues with your loved ones as you put together an estate plan, it’s better to not mention them at all. Otherwise, you risk adding more fuel to the fire when your other family members are grieving your loss.
Be aware that without proper estate planning tools, some aggravated “beneficiaries” may try to argue that your will is not valid, causing disputes with other loved ones as your case moves into the court system.
Set up a time to talk through your concerns with an experienced VA Beach estate planning lawyer.
Any loved one should have a power of attorney for healthcare set aside. This is the individual who is empowered to make medical decisions on your behalf if you are unable to do so because of your own incapacitation. Depending on where you live, this may go by a number of different terms but the primary basis is the same, to allow someone else to make decisions on your behalf.
Having a healthcare power of attorney is critical in the event of an emergency because it allows healthcare providers to know the life prolonging treatments a person wishes and wants and does not want to have, if you are no longer able to communicate their wishes to medical professionals.
A health care power of attorney can assist with allowing a loved one’s wishes to be enforced. When selecting a health care power of attorney, you should think about who will be likely to uphold your wishes. Parents may be tempted to select their oldest child for a power of attorney for health care and property because they don’t want to offend or insult them but this does not always mean that your oldest child is the most well-suited to this situation.
If siblings do not get along and you appoint different powers of attorney for health care and financial purposes, this could lead to problems down the road.
When you share your choice with your VA Beach estate planning lawyer, you’ll learn more about what’s involved for the person serving in this role.
Passing on your IRA to someone you love is a popular choice when engaging in estate planning. However, how you choose to pass this along could lead to unintended consequences for them or even problems that you never expected.
One of the most common mistakes that people make with regard to their IRA is letting these beneficiary forms filed directly with the IRA manager become out of date. Although you may have your estate planning tools that explain what you want to happen to your property after you pass away, the greater priority in a legal sense is given to the documents filed with the IRA company.
If you allow these forms to become out of date because you got divorced and the form still says that your spouse should receive all the benefits, legally, there is nothing your other beneficiaries can do if you never updated those forms. Another common mistake is to put your own estate as the beneficiary of an IRA. If you named a person to take over the account like a child or a spouse, they may be able to use a stretch-out feature to accumulate more wealth over time.
If your own estate serves as the beneficiary, however, that money is passed on to your loved ones sooner rather than later, such as within the next five years, and this can lead to higher taxation and a reduction in the amount of the possible growth for the IRA overtime. This is a bad result all around and one that should be avoided. Talk to a VA beach estate planning lawyer.
It is a common situation for someone approaching the estate planning process to put it off entirely because they simply can’t decide. They might not know who they wish to appoint as a power of attorney agent, they are not sure how the property should be distributed or perhaps they are having difficulty reaching a decision with the spouse about who should be named as the guardian of the children. Every so often, these people may reach out to an estate planning attorney to talk about what to do with their estate planning, but then months or years may go by simply because they never take the action since they cannot decide.
Even by not making a decision now, you are still deciding. You are enabling another person to step in and make these decisions on your behalf, if you don’t clearly explain it in your estate planning documents. This means that in the case of your minor children, a judge will be responsible for determining what will happen to your children and any money that they could inherit if you pass away.
By not choosing someone to step in and handle your finances in the event of a sudden disability or incapacity, you are assuming that a judge will know the best person for the job. This can be a major mistake and one that you leave your family members to deal with after you have already passed away. It is far easier to sit down and consider naming people to serve in this role now.
Remember that you can always schedule a future consultation with your estate planning attorney to update this material as your life evolves. But by not making a choice, you are still making the choice that you trust the courts to make these decisions on your behalf. Use a Virginia Beach estate planning lawyer to help.
By the time you are reading this blog, many people will have already made and possibly broken their New Year’s resolutions. However, you can capitalize on the energy of the new year by accomplishing a task that can benefit you and your loved ones forever. This is your estate planning.
Many American adults don’t have any estate plan in place or even a basic will that outlines what will happen to their assets after they pass away.
This could be a major mistake that could put your family members in a very awkward and frustrating position down the line as they wait for your estate to pass through probate. Probate allows the court to make decisions about the future of your assets rather than putting you in the driver’s seat to discuss what will happen with your beneficiaries.
Anyone who is approaching their golden years should certainly engage in the process of estate planning, but the truth is that everyone can benefit from estate planning, even 18-year-olds and single adults.
Having an estate plan makes things easier for you as well as any involved loved ones, should something suddenly happen. Sitting down in a consultation with an experienced VA estate planning attorney today gives you the best possible options to pursue meaningful strategies for your future.
Having an estate plan and being aware of what it says, in addition to communicating this to your loved ones who are key players in the estate plan, can ensure that this reflects your values and your wishes. Many of the most common responses when people are asked about their estate plans include:
- We have an estate plan or a trust, but we don’t really know what it means or what it says.
- We completed a will a long time ago when our kids were younger, but now we have grandchildren.
- We don’t have an estate plan at all. We know that we should have one, but we simply haven’t gotten around to it.
The role of an estate planning attorney is to help a client start, continue, or finishing a difficult conversation. In some cases when estate planning has already been broached once, the remaining decisions could be easy. In other cases, however, couples might disagree about their legacy and there could be sticking points that could make decisions difficult to arrive at. It’s critical to consider how assets are distributed in your estate planning process. A child with special needs, a second marriage, a family cabin, partial interest in real estate and more are all examples of how distribution of assets can become extremely complicated. Your estate plan should reflect what is most important to you.
You may want to consider passing on a legacy of charitable gifting and to consider how much is too much or enough for your children or other family members if something were to happen to you. What might be fair for one family, may not be equal for another. Scheduling a consultation with an estate planning lawyer is important.
Do you already have a college savings account set aside for your child or grandchild? If so, this is prudent planning. But you might want to take things one step further to ensure you’ve considered all potential aspects of planning for the future should something happen to you.
If you wish to support a beneficiary’s desire for college education in the future, you can do so using various estate planning tools. The most popular one of these is a 529 Plan and it is extremely important to consider determining a successor to oversee the distribution of a 529 Plan in the event that a parent passes away.
Parents who begin these tax advantage education savings plan that do not name a successor are at risk of having someone they are not familiar with controlling the child’s education funding if the parent is to suddenly pass away.
A successor is the individual who gets control of the account if the account owner passes away or is no longer capable of making decisions. Parents who stipulate a successor could still risk that that individual doesn’t control their wishes, but it is important for parents to prepare just in case. The right procedure for articulating a 529 Plan successor and someone to step in and manage your affairs if you are unable to so, is extremely important and should be handled with care, from the assistance of an estate planning attorney.