August 21, 2014   Inheritance

Inherited IRAs No Longer Protected From Creditors

By Matthew T. McClintock, J.D. Vice President, Educational Content, WealthCounsel In a major decision, the Supreme Court ruled this past June that inherited IRAs are not considered protected retirement funds—and are thus subject to creditors’ claims if the beneficiary files for bankruptcy. In the case of Clark v. Rameker, Heidi Heffron-Clark argued that a $300,000 IRA she inherited from her mother in 2001 qualified as a protected retirement account. As such, she contended, the account was exempt from the claims of creditors after Heffron-Clark and her husband filed for bankruptcy in 2010. However, under U.S. tax code regarding inherited IRAs, Heffron-Clark was required to withdraw a minimum amount of money from the account each year, even though she is not yet retirement age...
November 27, 2013   Inheritance

How to Disinherit a Family Member

When planning your estate, you have the right to distribute your assets any way you choose. There are a myriad of reasons why a person may decide to disinherit a would-be beneficiary from taking under his or her estate. The method of disinheriting a person depends on what their relationship to you is.   If You Would Like to Disinherit Your Spouse Unless your spouse agrees in writing, it is impossible to disinherit him or her completely. If your spouse agrees to be disinherited, he or she must either abandon you or agree to be disinherited through a legal contract. Otherwise, state law protections will keep a decedent’s surviving spouse from getting nothing from the decedent’s estate. In most states, a spouse who has not agreed to be disinherited but was left out of his or...
November 22, 2013   Inheritance

Before You Transfer Your Home to Your Child – Read This

For every person who transfers his or her home to an adult child without incident, there is another person who regrets his or her decision to do so. As with many estate planning tools, transferring a residence to an adult child is not the best option for everyone. If you are considering transferring your home to an adult child, it is important to first consider the risks involved.   Loss of Control Although obvious, it is important to remember that by giving your home away, you deprive yourself of the right to control it. This means that your adult children can charge your rent to live in your home, or simply kick you out. Moreover, you cannot keep the home from being mortgaged or sold.   Medicaid Ineligibility One common reason people choose to transfer their homes to their chil...
November 18, 2013   Inheritance

When You Should Refuse an Inheritance

Although seemingly counterintuitive, there are many reasons why a person may wish to disclaim a bequest he or she is set to receive under the terms of a loved one’s estate plan. Some of these reasons, detailed below, are completely overlooked by heirs who stand to gain from disclaiming.   If Your Beneficiary is in Debt Inherited assets are generally not safe from a beneficiary’s creditors. Therefore, if a beneficiary is in debt, his or her inheritance may quickly vanish in order to satisfy his or her creditors. To avoid this fate, a beneficiary must step out of line, allowing the assets to pass to the contingent beneficiary.   As a Corrective Measure Too often, people pass on with an outdated estate plan that does not convey their most recent wishes for the distribut...
November 6, 2013   Inheritance

The Dangers of Designating a Minor as a Beneficiary

Chances are, most adults have at least one account, investment, or other financial instrument that has a beneficiary designation. On the surface, this type of estate planning may seem simple. Realistically, all a person has to do is fill in the blank with a person or entity’s name. However, perhaps due to the outward simplicity of beneficiary designations, many people fail to avoid this common pitfall associated with beneficiary designations.   The pitfall occurs when a person designates a beneficiary who is either a minor or legally incompetent. For example, were you to take out a life insurance policy that names your minor child as the primary beneficiary, then pass on before your child reaches the age of majority, the life insurance company would not pay out to your child. Yo...
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...
April 17, 2013   Inheritance

Should You Disinherit a Child?

Most parents choose to leave their estates equally to their children. But sometimes, parents intentionally choose to not leave anything to one or more of their children. There may be what the parents consider to be legitimate reasons, such as if one child has been more financially successful than the others, or not wanting a special needs child to lose government benefits, or not wanting to leave an inheritance to an irresponsible or drug-dependent child. And sometimes a parent wants to disinherit a child who is estranged from the family, or to use disinheritance as a way to get even and have the last word.   But regardless of the reason, disinheriting a child is hurtful, permanent, and will undoubtedly affect that child’s relationship with his or her siblings. Courts are full o...
March 14, 2013   Inheritance,   Estate Planning

My “Uncle Bud” Earrings

By Wendi S. Temkin, Attorney at Law
My Uncle Bud was one of the sweetest men you could ever hope to meet.  He had a huge heart and a generous spirit.  He died of a stroke at the much-too-young age of 71.    In keeping with Jewish tradition, my family gathered for the unveiling of his headstone a year after he died.  I learned many wonderful new things about my uncle at this event, including that his desk had been littered with half written love notes to his wife of some 50 years at the time of his death.    At the luncheon after the ceremony, my Aunt Lee announced that when they had done their estate plan many years before, Uncle Bud felt it was important to leave a little something to each of his nieces and nephews to symbolize how much they meant to him.  The amount he settled on at...
March 6, 2013   Inheritance

How to Leave Assets to Adult Children

When considering how to leave assets to your adult children, first decide how much you want each one to receive. Most parents want to treat their children fairly, but this doesn’t necessarily mean they should receive equal shares of your estate. For example, you may want to give more to a child who is a teacher than to one who has a successful business. Or you may want to compensate a child who has taken care of you during an illness or your later years. Some parents worry about leaving too much money to their children. They want their children to have enough to do whatever they wish, but not so much that they will be lazy and unproductive. Well, no one said you have to give everything to your children. You may prefer to leave more to your grandchildren and future generations throug...
October 8, 2012   Inheritance

What and When Should You Tell Your Children About Their Inheritance?

Not many parents like to talk to their children about their wealth. How much money people have is usually considered a private matter, something it’s not polite to talk about. But not talking to your children about how much they may inherit can leave them unprepared to handle even a modest amount.   This is becoming especially important because children of baby boomers are due to inherit more wealth than ever before. It has been estimated that baby boomers will inherit $12 trillion from their parents, and they will leave an additional $30 trillion to their own children over the next 30 to 40 years.   Many who have substantial wealth are concerned that letting their children know how much they have will take away any motivation for the children to be productive and involved...
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