Estate Planning

October 25, 2013   Estate Planning

Three Vital Estate Planning Strategies for Your College-Aged Child

Graduating from high school and preparing for college is a very exciting time in a young adult’s life. With all the preparation that is necessary, most young adults overlook one of the most important things they should do upon turning age 18: estate planning. While most 18-year-olds do not have large estates or families to plan for, there are three estate planning documents that every 18-year-old needs.   1. Springing Power of Attorney The first necessary part of a young adult’s plan is a springing power of attorney. Through a springing power of attorney, a person designates someone to make business and financial decisions if he or she becomes incapacitated. Importantly, the power of attorney does not “spring” into action until the person who drafted it becomes...
October 23, 2013   Estate Planning

Your Digital Life and Your Estate Plan

More and more, individuals are living their lives online. From social media to financial accounts to emails and messaging, individuals create a vast online presence that lives on after they die. Therefore, the integration of digital assets into an individual’s estate plan is becoming increasingly important.   Because individuals are conducting such a large part of their lives online, it can quickly become problematic when family members cannot access these accounts after a loved one’s death. In previous generations, if a person died without providing information on his or her financial accounts to his or her beneficiaries, the beneficiaries would be able to follow a paper trail to determine what accounts the decedent held. With the emergence of fully online account managem...
October 18, 2013   Estate Planning

What is a Life Estate?

There are various forms through which a person can hold ownership in property. One such form is the life estate. If a person holds property in a life estate, he or she retains the right to occupy, possess, and enjoy the property. However, when he or she passes on, their interest in the property automatically terminates. Due to this termination, a life estate holder cannot transfer his or her interest in the property through a will. Life estates, therefore, are typically used to keep property from being transferred through the process of probate. Consider that a person wants to transfer his home to his child. Without any planning, the home will have to go through the process of probate before ownership could be transferred. In order to avoid this, the homeowner would execute a new deed tha...
September 25, 2013   Inheritance,   Estate Planning

Estate Planning for Divorced Parents with Minor Children

As our families grow, change, and become more complicated, their estate plans must grow and change with them. Those with minor children need to pay careful attention to their estate plans after divorcing their spouse. These individuals have two main estate planning concerns: guardianship and inheritance.   Guardianship determines who you would like to care for your children if you’re unable to care for them because of your incapacity or death. The child’s guardian will be responsible for providing the child with food, shelter, support, and education. Guardianship also concerns visitation of your family should you die before your former spouse.   For the benefit of your children, it is important to sit down with your former spouse to develop a unified plan for guardian...
September 23, 2013   Estate Planning

Serving as Custodian for a Minor Child's Account

A custodial account holds assets for a minor until he or she reaches a specified age and receives the assets. From the inception of the account, the child is the legal owner. Although the child cannot control the assets, the donor cannot take the assets back for any reason. If the assets make income such as interest or dividends, the amount of the income is to be taxed as income to the minor.   A parent, guardian, or other adult can serve as the custodian of the minor’s account. The role of the custodian is to manage the assets for the benefit of the minor. This management may include buying, selling, and reinvesting the earnings of the account.   The custodian may also make withdrawals of some or all of the assets, if necessary for the benefit of the child. Of course, the...
September 20, 2013   Estate Planning

Two Types of Trusts: Which Protect Against Creditors?

An important estate planning goal for many individuals is to be sure that their money ultimately passes to their heirs, rather than their creditors. One common estate planning tool used for this purpose is the trust. Essentially, a trust is a legal arrangement under which the creator (often called a “trust maker” or “settlor”) transfers ownership of assets into the care of another person (the “trustee”) to be administered for the benefit of another person or group of people (the “beneficiaries”). The document that establishes the responsibilities of the trustee and the rights of the beneficiaries is called the “trust instrument”, “trust agreement”, or simply “the trust.”   One type of trust that will p...
September 18, 2013   Estate Planning

Your Joint Accounts and Estate Tax Planning

Joint accounts are a popular estate planning option, because they allow the quick transfer of assets after a loved one dies. As the surviving joint owner of an account, a person takes complete ownership of that account after proving the death of the deceased joint owner. When the joint owner dies, there are often estate and inheritance tax consequences related to inheriting a joint account.   If the joint owner was your spouse, half of the fair market value of the entire joint account will be included in the decedent’s estate. If the joint owner was someone other than your spouse, the fair market value of the entire joint account will be included in his or her estate. After determining how the account will be divided among the owner’s estates, it is important to determine...
September 13, 2013   Estate Planning

Estate Planning for Veterans: Benefits & Pensions

If you or your spouse served in the United States Military, there are several pension benefits that you may be eligible for. It is important to be aware of what these benefits are so that you can take full advantage of them when they become necessary.   The first is called Veterans Pension. This benefit provides veterans and their families with supplemental income in order to assist them in meeting financial challenges. This benefit is tax-free, and is available to wartime veterans with a low income. In order to be eligible for this benefit, a veteran must have served a minimum of 90 days in active duty. At least 1 of those 90 days must have been during a wartime period. A veteran who served after September 7, 1980, must have served 24 months, with at least one day during a wartime pe...
September 11, 2013   Estate Planning

Pitfalls of a Healthcare Power of Attorney & 3 Ways to Protect Yourself

A healthcare power of attorney is an important part of most estate plans, and for good reason. Through a healthcare power of attorney, a person can designate the individual responsible for making medical decisions on his or her behalf, should he or she become incapacitated. Individuals should be cautious, however, as a healthcare power of attorney comes with its own set of risks.   Healthcare power of attorney documents are not foolproof. Often, defects in these documents are not discovered until after the creator becomes incapacitated. For example, your agent under a healthcare power of attorney may not discover that your documents were executed incorrectly until the point that he or she attempts to make a decision on your behalf.   Another potential problem with a healthcare po...
September 9, 2013   Estate Planning

Can I Make Handwritten Changes to a Will Without an Attorney?

After creating a will, many people decide to update and change that will. Rather than taking the will to an attorney, some will attempt to update the will themselves. This post discusses the validity of handwritten changes to wills. It is important to remember that state law governs the creation and revision of wills. Therefore, check the laws of your particular state before making any changes to your will.   Depending on the laws of your state, the handwritten notes may qualify as a valid testamentary disposition. This is more likely to occur if the handwritten changes are entirely in the will maker’s handwriting, and are signed and dated. Conversely, a court in another state may find that the entire will is invalid based on the handwritten notes.   Despite what the laws o...
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