7

7 Commonly Overlooked Elements to Consider in Estate Planning

couple sitting with estate planning lawyer | commonly overlooked estate planning items

Commonly Overlooked Estate Planning Items | NOVAEstateLawyers.com

No matter your age, health, or life circumstances, it’s never too early to think about estate planning.

When drafting your estate plan, you’ll want to make sure you cover all your bases. Here are some commonly overlooked items to consider when creating yours.

1. Incapacity

When drafting an estate plan, many people focus solely on what happens to their assets when they pass away. However, it’s also very important to plan for incapacity and consider what might happen if you were physically or mentally unable to make decisions for yourself. In this case, you’ll want to appoint someone you trust to serve as your agent under a Durable Medical Power of Attorney and Living Will (for medical and end of life matters) as well as a Durable General Power of Attorney (for financial matters), so that this person can protect you and your assets when you are temporarily or permanently unable to do so yourself.

2. Asset management for minor children

If you have minor children, you’ve likely considered who you might designate as their legal guardian if something were to happen to you and/or their other parent before they reach adulthood. However, it’s also important to think about the management of any inheritance or assets they would receive in the event of your premature death.

A revocable living trust can be a handy estate planning tool for protecting your minor children’s inheritance by ensuring it is managed by an appropriate trustee until your children are mature enough to manage it for themselves. It also ensures that your estate does not end up in the hands of someone else should the child inherit from you outright.

3. Digital assets

As our lives become increasingly digital, many of our assets exist online. However, many estate plans fail to consider digital assets like photos and videos, emails, social media accounts, documents, and more.

It’s important to authorize your agent under your financial power of attorney or your executor under your Will or your trustee under your Trust to handle all of your accounts, including setting up a new user ID or password for such accounts, rather than having to write that private information down and constantly have to update it.  Of course, making a list of what accounts you have, so that these individuals know what needs to be protected is extremely helpful even after you sign your estate planning documents, and you should periodically update it if your accounts change.

4. Divorce protection

While you didn’t enter your marriage with a plan to eventually get divorced, you’ll want to prepare for anything when drafting your estate plan. This means protecting your assets in the case of separation or divorce from your spouse. Though you might plan to distribute your assets to your spouse, understand how a divorce will affect or change your estate plan.

5. Updates/changes that impact your estate plans

Estate planning is not a one-and-done effort — there are many life changes that can impact your estate. To ensure your estate is ready for anything life throws at you, frequently revisit and update your plan to accommodate such changes. For example, family deaths, births, divorces, etc. are all potential game-changers in estate planning. Periodically review your estate plan to ensure your wishes are still relevant.  Make sure you understand what assets will, in fact, be controlled by your estate planning documents and which will not.

6. Ever-changing tax exemptions

Tax exemptions can impact your estate and its heirs, particularly around lifetime gifting. If you have significant wealth or expensive properties, review your tax exemption options each year to lessen any potential financial burdens.

7. Seeking expert guidance

Rather than consulting with a professional, many individuals try to save money by drafting their estate plans on their own. However, doing so could mean you miss out on potential tax exemptions, fail to protect your assets, or overlook any of the above elements.

Estate planning is a challenging process, and working with an expert can help you avoid potential issues along the way. The Law Office of Patricia E. Tichenor has 20 years of experience handling estate planning matters for Virginia residents.

If you need help drafting your estate plan, we can guide you and your family through the process. Contact us to schedule a free consultation about your estate planning needs.

6 Estate Planning Resolutions for 2021

2021 estate planning resolutions | 2021 blocks on coin stacks

2021 Estate Planning Resolutions | NOVAEstateLawyers.com

Whether they’re for self-improvement, career-oriented, or health-related, New Year’s resolutions can help set the tone for the next 365 days and beyond.

That’s why we recommend adding estate planning resolutions to your list. It’s never too early to determine how your estate and other assets will be distributed to your family and loved ones, especially with potential changes to estate tax laws under the incoming Biden administration.

Here are six important estate planning resolutions to make in 2021.

1. Draft a Will if you don’t already have one.

A valid Will is a document that directs, under the supervision of a probate court, how you want (and to whom you want) to distribute your property and financial assets when you die. Without one, you may open your family up to unnecessary expense and stress, and see your assets pass to persons (or ever your creditors) in a way you would never have wanted.  In your Will, you should name a trusted executor (such as spouse, family member, close friend, or, in certain cases, an attorney or CPA), who is willing to be responsible for overseeing the management of your assets after your death.

2. Create a revocable living trust.

A revocable living trust is another estate planning tool that aids in the transfer of property. A revocable living trust can be adjusted at any time during your life and preserve certain assets for specific reasons important to you, such as keeping the family home for your children to continue to be raised in if both you and your spouse die. If you have minor children, a revocable living trust allows you to designate how their inheritance and finances will be managed until they reach an age (or set of ages) you feel most comfortable giving full control to them over their inheritance.

3. Update your powers of attorney, executor, and/or beneficiaries if any family circumstances have changed.

Ideally, the person(s) you name as attorney-in-fact under your powers of attorney and executor in your will is someone you trust to keep your best interests at heart. Unfortunately, your initial choices for these roles may not always remain the same.

A designated attorney-in-fact or executor should be changed in your estate plans if the chosen individual passes away before you, or if other recent circumstances (divorce, bankruptcy, a falling out, etc.) make you feel that they should not be involved in carrying out your final wishes. Be mindful not to appoint someone who could abuse this privilege for selfish reasons.

Similarly, you may want to review your list of beneficiaries to ensure that your selections reflect your current circumstances. For instance, if you are recently divorced, you should review your will and change anything that may be associated with your ex-spouse and their family.

4. Make sure you’ve appointed a legal guardian for any minor children.

No parent wants to think about what would happen if they pass away or become incapacitated while their child is still a minor. However, this is precisely why naming a legal guardian in your Will is so important.

Typically, if you die before the child turns 18, your child’s other parent becomes the legal guardian and assumes responsibility for that child’s care and well-being. If you both pass away (or if the other parent is not involved in your child’s life), naming a legal guardian or guardians in your Will ensures that important decisions about your child’s future are not left to a court or Department of Social Services.

5. Consider the potential tax implications of the Biden administration.

Under Biden’s presidency, there will likely be some new tax implications for estates. The incoming President plans to return to a reduced exclusion amount, which would subject a significantly increased number of estates to taxation.

Additionally, Biden proposed an elimination of the “stepped-up basis.” The current stepped-up basis allows assets to rise to the current market value before being passed on, so heirs can sell the inherited assets with minimal to no income tax. Under Biden’s proposed change, however, those who inherit assets (like a house) will have to pay increased capital gains taxes. You’ll want to keep these changes in mind when preparing or updating your estate planning documents.

6. Review your entire estate plan and consider whether you need to make any changes.

Your life circumstances can change a lot in a few short years, so be sure to review your entire estate plan and consider whether you need to make any changes, especially if you have not done so recently. When making these updates, ensure that all your retirement accounts, joint properties, life insurance, and beneficiary designations are recent.

Get help keeping your estate planning resolutions.

The best way to keep your 2021 estate planning resolutions is to work with a knowledgeable estate planning attorney. The Law Office of Patricia E. Tichenor, P.L.L.C. has 20 years of experience serving the needs of Virginia families, and we can help you with creating or updating your estate plans. Contact us today for a free consultation to learn more.

Is a Simple Will Enough? Why You May Need Other Estate Planning Tools

simple will - last will and testiment

Is a Simple Will Enough? | NOVAEstateLawyers.com

A simple Will is a good start for your estate plans, but it may not be enough for your needs. When you use a Will to leave your assets to loved ones, you trigger the probate process, which can mean administrative headaches and delays before your named executor is able to deliver anything to them not to mention exposing all your assets to your creditors for collection.

Probate can often draft out for more than a year after your death and eat up a percentage of your estate in the payment of probate taxes, court administrative fees, and legal fees if you need an attorney to assist you during the probate process.

While your family may not be able to avoid probate altogether, you can reduce the number of assets that must pass through a Will (therefore, through probate) with other types of estate planning tools.

Why a simple Will is not enough

In many circumstances, a simple Will is not the best tool to use for an estate plan, no matter how small your estate may be due to the paperwork burdens and pitfalls related to the demands of creditors against the assets passing through your Will.  Of course, if you have a larger estate of complex assets (like owning your own business), then a Will and the probate process are often the worst option for your estate plan.

Many individuals do not realize that they can avoid many of their assets passing through their Will.  For example:

  • Beneficiaries designations. If you have a pension plan, 401(k), or life insurance, the beneficiaries you designated at that time will inherit these accounts upon your death. This cannot be overridden by a Will no matter what you say in your Will. If you want to change your beneficiaries, you must be changed directly with the account provider. If you truly want these types of assets to pass through your Will, you need to put “my estate” as your beneficiary instead of a person.  However, then 100% of those assets will be subject to probate taxes, paperwork delays, exposure to your creditors, and possibly taxes.
  • Joint tenancy and other jointly-owned assets. If you own a house, bank account, or any other assets with a spouse or partner, that individual would receive full ownership upon your death. This also cannot be changed by a simple Will. The named survivor will take this outside of your Will entirely.
  • Lowering estate taxes. If you expect your estate to owe taxes, a basic Will cannot reduce that tax burden for your beneficiaries. Rather, you’ll need to take steps during your lifetime to lower estate taxes, such as establishing trusts and making lifetime gifts.
  • Conditional giving. If you want to establish any conditions for giving — for example, how your money will be spent, or at what age your beneficiaries can access those funds — a simple, basic Will is not suited to this goal. A Trust approach will be much more effective, and it can be established either during your lifetime (a living trust) or upon through a more complex type of Will which would contain a type of trust that is only funded by your executor after you die (called a testamentary trust). The pitfall of using a testamentary trust is that you again subject all your assets to the probate process and exposure to your creditors.
  • Special needs trusts. If you have a child or beneficiary with special needs, leaving money directly to them in your Will can actually hurt them in the long run. Not only could it deem them ineligible for government benefits, but it could also create a significant and unnecessary tax burden. Establishing a special needs trust allows you to provide for an adult child or beneficiary after your death, without any of the downsides of leaving their funds in a simple Will.

Choose the right estate planning tools for your needs

While writing a simple, basic Will may appear to be the easiest solution for your estate plan, it’s likely not the only document you will need. Supporting your Will with additional estate planning tools can ensure that your estate is divided the way you intended, with minimal time in probate court and minimal burden on your loved ones.

Many states have also adopted new laws that offer wonderful alternatives to simple estate planning that do not involve a Will, such as the revocable transfer on death deed or the right through the DMV to assign a transfer on death beneficiary for your vehicle.

If you are still unsure which estate planning tools will best meet your needs, The Law Office of Patricia E. Tichenor is here to help. With our extensive experience in estate planning and probate matters, we can help you determine whether an estate planning tool like a trust is a better solution for you than just a simple Will. Schedule a free 30-minute consultation with us to discuss your circumstances.

What If I Want to Leave My Estate to Someone Other Than My Family?

person signing last will and testament

How to Leave Assets to Non-Family Members | NOVAEstateLawyers.com

A common misconception with estate planning is that you have to leave your estate to someone in your family when you pass away.  However, in the United States, with the exception of a spouse, you are free to leave your assets to anyone you wish, including a non-marital partner, friends, a charity, or even a pet.

When a person dies without a Will and has failed to designate a beneficiary on his or her bank accounts, retirement, or other financial assets, their assets will pass to certain blood-relatives provided by the applicable statute for the State in which they die.  In addition, your assets can be seized upon by your creditors should they all end up in probate – a very real problem these days when individuals die with a mortgage, credit card debt, or large medical bills that go unpaid by insurance.

If you want to leave your assets to someone other than your family and avoid your local statute in your State controlling who inherits your estate, you can actively take the following steps to avoid this outcome.

Create a proper Will, trust, or name specific beneficiaries on your financial accounts.

Depending on your long-term goals, you can entirely avoid probate by designating specific individuals (non-family members) as your beneficiaries on your bank accounts or other financial assets.  This is called designating a payable on death (POD) or a transfer on death (TOD) beneficiary.  If you are married, you may not be able to remove your spouse as the primary beneficiary on your retirement accounts; however, for your other non-retirement accounts, if titled in your sole name, you can consider naming someone other than a spouse as the POD or TOD beneficiary.

If you prefer to use a Will, you will want to avoid naming any POD or TOD beneficiary on your accounts and, instead, allow all your assets to pass through your Will to the beneficiaries you choose to receive them.  Using a Will, however, means probate, which involves additional costs, paperwork burdens, and delays – and sometimes probate contests.  If you want to avoid probate, you should consider a Trust plan and then designating your Trust as the POD or TOD beneficiary, so that all your assets can be transferred by your successor

trustee to your named beneficiaries in your Trust (which can even include providing for a beloved pet using a Pet Trust), and allow you to avoid probate.

Give intended gifts to friends while you’re still alive.

Subject to the federal gift tax limitations in effect in a year when you make a gift (i.e., currently $15,000), you might also consider giving gifts during your lifetime to persons other than your spouse or family members who you wish to benefit from your estate.  This is often used to give physical property items rather than cash, and it ensures they get into the right hands. Lifetime gifting also has the advantage of reducing your taxable estate.

Disinherit troublesome family members.

If you think certain family members may try to fight your wishes of who receives your assets, you can disinherit them with the following estate planning tools:

1. Designate beneficiaries now and Include No-Contest Clausel.

By naming who you’d like to receive your property, and including a no-contest clause in your Will or Trust, you help avoid conflicts among family members over who will inherit your assets.

2. Document the disinherited family members with a supplementary letter.

Including a letter supplementing your Will naming any specific individuals whom you don’t want to inherit your assets can help a probate court better understand your wishes.

If you choose to go this route to ensure certain family members don’t receive your assets, be descriptive and document specific reasons why you don’t want those individuals to inherit anything from your estate. These types of letters can be tricky to format and execute properly, so be sure to consult an attorney for assistance.

3. Have your spouse waive their claim.

Traditionally, you can’t legally disinherit your spouse from receiving your assets upon your passing. However, if you and your spouse sign a Post-nuptial Agreement (called a Post-Marital Agreement) in Virginia, you can both agree to legally waive your respective right to what’s called “the elective share” or “augmented estate” at the time of your spouse’s death.  This is often a provision included in separation agreements as well when spouses separate but have not yet obtained a divorce due to the statutory waiting periods in Virginia for legal separation.

For assistance with mapping out a plan to ensure your assets go to the people (or pets) you want to receive them, you can schedule a free consultation with the Law Office of Patricia E. Tichenor to what approach and documents work best for you.

5 Estate Planning Tips for Single Parents

NOVA-Estate-Lawyers-Tichenor_Estate-Planning-and-the-Single-Parent

Estate Planning and the Single Parent |
NOVAEstateLawyers.com

While estate planning is important for every parent, single parents face unique challenges when planning for their children’s future. As the primary caretaker for your children, you need to plan for several scenarios to ensure they have the proper safeguards in place. No matter how large or small your estate is, it’s important to protect it for your children.

An experienced attorney can walk you through the processes of how to protect your children’s family home or other assets you’ve built up from probate and other taxes, as well as from predators who can steal from your unsuspecting children. These five estate planning tips for single parents will make sure your children are properly protected in the event of your death or incapacitation.

1. Create a Will and/or trust.

No matter what your family situation, step one of proper estate planning and understanding the unique considerations that come with having a child, especially a minor, inherit from you.  Avoiding probate is just one consideration.  Knowing how to protect what your children inherit from your creditors and to stagger distributions to them to ensure they don’t squander their inheritance or become vulnerable to manipulation by others is another.  A Wil is not the best answer in these situations.  It may be far better to set up a trust – especially if you own any real estate.

By setting up a trust for your minor child(ren), the assets you leave behind, including your family home, can be maintained (if desired) or otherwise managed by a trustee.  The assets of the trust can provide ongoing financial support for your minor child in a structured and safe manner.

Trusts can also protect children after they turn the legal age of 18. Even though they are now considered adults, they may not have the knowledge, skills, or maturity to properly manage their inheritance. Your trust can designate yearly funds or delay inheritance of the entire estate to a later date.

2. Designate a legal guardian.

As a single parent, it’s essential to designate a trusted, responsible adult to take physical custody of your minor child(ren) if you die before they reach adulthood. If you have sole custody and pass away without choosing a legal guardian, your child’s other parent (if still living) may automatically be given custody, which may not be in the best interest of the child if the marriage dissolved due to abusive issues, a criminal record or homelessness.

When you’re choosing a guardian, remember that it does not have to be the same person who’s managing the trust on behalf of your child(ren). Sometimes it’s wise to have different people managing money and children, as they have different skills and qualifications. One may be better at parenting, while the other is a whiz at financial investing. If two people are designated, they will need to work together in the best interests of the child.

Some items to consider when designating a guardian include:

  • Whether your child should receive an allowance.
  • Whether the guardian should move into your home to care for your children, and if so, what is their legal responsibility for care of the home?
  • Whether the guardian will be compensated.
  • Religious concerns.
  • Whether the person you want to be the guardian will accept the responsibility. Always ask before designating anyone.

3. Plan for incapacitation.

Another scenario single parents must consider is what should happen if they become incapacitated. When planning for incapacitation, you may name an attorney-in-fact or agent under a durable general power of attorney to make financial and health care decisions if you are unable to do so. Designating such a person allows them to make financial decisions for you, including using your funds to support your children or maintain their family home during your incapacity.

4. Consider life insurance.

To help ensure their children have financial support after their death, a single parent should consider investing in additional life insurance or increasing the death benefits under an existing policy. However, you should not name a minor as a beneficiary to an insurance policy, as life insurance companies will not pay proceeds to minor children. Instead, it is best to create and name a trust as the beneficiary of your life insurance, and then your trustee can manage the assets on behalf of your child(ren). This also avoids a separate, lengthy and expensive court process to appoint a guardian to manage these assets for your child(ren).

5. Speak with an experienced estate planning attorney.

If you are a single parent ready to secure your child’s inheritance, speak with an experienced estate planning attorney about your options. Schedule a free, 30-minute consultation with the Law Office of Patricia E. Tichenor to discuss your Virginia estate planning needs, including Wills, trusts, and guardianship plans.

The Law Office of Patricia E. Tichenor, P.L.L.C.
Professional Legal Services or Legal Representation
(703) 669-6700

Contact

Social Media Auto Publish Powered By : XYZScripts.com