Tag Archives: Estate Planning

How to Create an Estate Plan for a Disabled Beneficiary

estate planning for disabled beneficiary | parent pushing child in wheelchair

Estate Planning for a Disabled Beneficiary | NOVAEstateLawyers.com

Many people choose to create an estate plan to provide for their loved ones after their death. In some cases, this may include providing care for a person with a physical or mental disability.

If you intend to leave any portion of your estate to a disabled beneficiary, it’s crucial to develop your plan carefully to meet that beneficiary’s individual needs. A well-developed plan will ensure that your loved one receives the maximum amount you wish to leave them from your estate, without disqualifying them from certain government benefits.

Here are some considerations to keep in mind and include when creating an estate plan for a loved one with a physical or mental disability.

How to create an estate plan for a disabled beneficiary

There are several estate planning strategies that will ensure your loved ones are cared for after your death, including provisions in your Will and a Special Needs Trust (SNT).

When your estate plan includes a disabled beneficiary, there are additional steps you’ll need to take to ensure their individual needs are met:

  • Understand the type of disability. The needs of someone with a physical disability will differ from those with a mental disability, and specific physical or mental disabilities will require specific supports. The interaction of multiple diagnoses can also play a role into the type and degree of disability.
  • Understand the beneficiary’s abilities and limits. Even within a given diagnosis of a physical or mental disability, each individual has their own unique abilities and limitations. Keep in mind what your loved one can do, in which areas they need support, and the level of support they need.
  • Consider their future needs and whether their condition will require extra help. In addition to considering your beneficiary’s current needs, you will also need to keep in mind their future needs. If they will need special housing or care down the road, include any specifications for these in your estate plan.
  • Determine the government benefits and sources they rely on. Government programs like Medicaid and Supplemental Security Income (SSI) programs have specific qualification requirements, including limits on the assets or income a beneficiary may have in order to qualify for such benefits. If your loved one relies on these programs, check the eligibility requirements to ensure that your estate plan does not disqualify them.

Disinheriting a beneficiary with a disability

One estate planning option is to disinherit the disabled individual. Though this may seem counterintuitive, the process of disinheritance allows your loved one to continue collecting government benefits while also being supported by any siblings or close relatives.

In essence, a disinheritance estate plan would leave the entire estate to the surviving relatives of the individual with a disability, while also legally obligating them to use a portion of the inheritance to provide care for their disabled sibling.

While disinheritance is a less complicated option than including a disabled beneficiary in your estate plan, it also has potential downsides. One major disadvantage is that your loved one may not receive the full portion of the estate that you intended for their care. Factors such as sibling bankruptcy, divorce, or failure to fulfill their obligation of support can all reduce the amount of the estate that the disabled sibling actually receives. Additionally, the process of disinheritance can also harm the relationship between the disabled individual and the person making the estate plans.

Get help with your estate plans

Estate planning can be a complicated process, especially when planning for the care of someone with a physical or mental disability.

If you are in the process of creating a Will that includes a disabled beneficiary, contact the Law Office of Patricia E. Tichenor for help. We have 20 years of experience handling estate planning for Virginia residents and can guide you and your family through the process.

Contact us today to schedule a free 30-minute 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.

6 Questions to Ask Yourself as You Make Your First Estate Plan

first estate plan

First-Time Estate Planning Questions | NOVAEstateLawyers.com

An estate plan ensures your loved ones and assets are taken care of if you become incapacitated or pass away. While it’s not exactly an uplifting task, it’s important to plan ahead so your loved ones aren’t caught off-guard or left to sort through your affairs on their own.

However, thinking about your final wishes, especially at a young age, can be overwhelming. To help make the process of developing your first estate plan easier, here are six essential questions to ask yourself.

1. What assets do I have?

Assets come in two forms: tangible and intangible. Having a list of your assets is an imperative part of the estate plan execution process, and as you create your plan, will help you answer important questions. Your assets may include: checking accounts, savings accounts, a life insurance policy, 401(k) or other retirement accounts, a business you may own, copyright or trademark, real estate, vehicles (including boats, trailers, motorcycles, etc.), valuable heirlooms or antiques, and social media or digital assets.

2. Who do I want as my executor?

Your executor is the person responsible for carrying out your final wishes set forth in your Will after you die. The key consideration in selecting an executor is whether they are trustworthy and well-organized. While some people name a close family member, like a spouse or adult child, you can also choose a trusted friend or a professional (e.g., a lawyer, CPA, financial planner or even a bank) to serve as your executor. A person who will fulfill your intended wishes with respect to your estate plan would be a good choice.

3. Who should I designate as my attorney-in-fact under a POA?

As with an executor, the attorney-in-fact (commonly referred to as “your agent”) named in your power of attorney (POA) should be someone you know and trust. For each type of POA, one for your financial matters and another for your medical matters, the person you choose will be responsible for properly managing all of your financial affairs or potentially making life-changing medical decisions for you if you lose the capacity to handle those matters on your own due to severe illness or injury.

Serving as an attorney-in-fact under a financial POA is a big responsibility, so choosing someone who is financially sophisticated and well-organized is key. Choose carefully a trusted friend or family member for this role who will not feel overwhelmed by handling your affairs, or consider naming more than one friend and family member to serve as co attorneys-in-fact so that they can share the various duties that will fall upon them under you POA.

4. Would it be better to transfer my assets using a Revocable Trust rather than using solely a Will?

The decision to pass your assets to beneficiaries through a trust or a Will depends on which assets you own and their nature. It also depends on your overall planning goals.  Trusts offer a lot more flexibility and options for planning than a traditional Will, such as holding title to your residence so that, after your death (and your spouse’s if applicable), the home can be maintained for the benefit of your children who might need or want to continue to reside in the home after your death with your named guardian, or having the children’s inheritance managed over a longer period of time with specific ages for when a child will receive outright distributions of his/her inheritance.

Depending on what property is held in the trust, your family may be able to avoid probate administration for these assets upon your death.  Trusts also help you maintain a certain degree of privacy, whereas what passes through your Will and probate of that Will is a matter of public record.

5. What are my healthcare wishes?

In the event you become too ill to make your own healthcare decisions, listing your healthcare wishes in an estate plan will ensure you get the care you desire. To begin listing your healthcare wishes, make a note of the type of facility you’d like to live in, such as your home or a hospice and palliative care center.  Investigate pros/cons of purchasing a long-term care insurance plan depending on any history of dementia, Alzheimer’s disease or another degenerative neurological disease.

6. Should I discuss my plans with my family/loved ones?

Depending on your age and medical condition, it may be best to share your estate plan with your family/loved ones rather than simply placing somewhere secure in your home or in a safe-deposit box. At the very least, even if you are not comfortable sharing copies of your signed documents with them, consider giving them a heads-up if they have been appointed to the role of attorney-in-fact or executor, and where to locate your documents should something occur with your health or should you die. Ask them if they are comfortable with the arrangements you want to make, and have discussions outlining their potential responsibilities.

The Law Office of Patricia E. Tichenor specializes in all aspects of estate planning, including providing clients with invaluable free legal guidance on how to avoid probate using trusts, POAs, deeds, as well as key guidance on issues involving special needs trust planning, guardianship and conservatorship for Virginia residents.  For assistance with creating your first estate plan or updating an existing one, contact us today.

Can I Disclaim My Inheritance?

beneficiary meeting with attorney about inheritance

How to Disclaim Your Inheritance | NOVAEstateLawyers.com

In most cases, when a loved one leaves you something in their Will or Trust, it’s an honor. However, that doesn’t always mean you’d like to inherit the property or assets passed down to you.

There are plenty of valid reasons to disclaim your inheritance, and with the proper legal documentation, you may refuse assets left to you by a loved one who died with a valid Will or Trust, or even if you are an heir-at-law when someone has died without a Will or Trust. Here’s what you need to know about using a qualified disclaimer.

 

Why would you want to disclaim your inheritance?

You can disclaim a gift or inheritance for any reason, but here are a few of the most common:

  • Inability to maintain the assets left to you. If a loved one left you a sizable asset, such as real estate or a vehicle, you may not be in a position to maintain or manage that asset, even if you planned to sell it. In this case, you may wish to disclaim that asset, so it goes to other named beneficiaries or heirs who are more equipped to handle the situation.
  • Reducing your taxable estate. This is not a likely scenario for most individuals, but in some cases, inheriting assets from a loved one can put you over the federal thresholds for estate tax if you die after inheriting from someone and the inheritance is counted as part of your estate, or trigger hefty inheritance taxes by the local State taxing authorities where you reside. Note – not all States have an inheritance tax, so it is helpful to determine whether you do or do not live in a state that imposes inheritance taxes.
  • Debt/bankruptcy. When a beneficiary is deep in debt or bankruptcy, any inheritance received may be claimed by creditors to cover those debts. If this is the case for you, you may wish to disclaim your inheritance so the assets or property can stay in the family.
  • Honoring the decedent’s true wishes. Perhaps you knew the decedent well and know they did not have a chance to update their Will before they died. If you are receiving an inheritance that would be more appropriate to give to someone else who was in their life, you may consider disclaiming it.
  • You believe you are too old or have an illness where you can’t truly benefit. Perhaps you feel that, at your age or in your medical condition, it is not ideal for you to be the one to inherit from a loved one’s Will or Trust, and you prefer to disclaim the inheritance in favor of other beneficiaries who need it or can make a longer-term use of the inheritance than you may be able to do during your lifetime.

This is not an exhaustive list of all possible reasons for disclaiming your inheritance. You might refuse to accept your inheritance for a variety of other reasons, or even for no reason at all. The choice is entirely up to the beneficiary.

How to decline an inherited asset using a qualified disclaimer

If any of the situations listed above (or another) apply to you, you might consider having an attorney prepare a formal Disclaimer for you and ensuring that it gets filed with the proper court and taxing authority by not later than nine (9) months after the death of the person from whom you are inheriting.  Disclaimers can be partial or full disclaimers.  However, once a disclaimer is completed, you may not benefit from that particular item of the estate (e.g., disclaiming inheritance of a piece of real estate) and you cannot change your mind after the fact. So, if you’re sure you want to disclaim your inheritance, here are the steps you’ll need to follow:

  1. Work with an attorney to have them prepare a proper, formal disclaimer/refusal to accept inheritance in writing, and be sure to sign and notarize it.
  2. Deliver your disclaimer document to the estate’s executor or trustee within nine months of the decedent leaving you the inherited assets or property.
  3. File a copy of the Disclaimer with the local county courthouse where the deceased person resided when he or she died, as well as the Internal Revenue Service (in consultation with a CPA).
  4. Once your disclaimer has been filed, do not accept, directly or indirectly, any benefits or assets from the estate you’re disclaiming. Otherwise, your disclaimer may be rendered invalid and you will be subject to any tax or legal obligations associated with inheriting.

Important nuance: Minor children can have inheritance disclaimed as well on their behalf by a legal guardian or parent; however, these disclaimers may not be legally binding in the eyes of a court unless and until the child reaffirms the disclaimer when they attain eighteen (18) years of age.

If you have any questions about how to prepare a Disclaimer or pros and cons for using disclaimers, consider hiring a local estate planning attorney to guide you through the process. The Law Office of Patricia E. Tichenor, P.L.L.C. has nearly 20 years of experience helping Virginia families with probate/inheritance matters.

Contact us today to discuss your circumstances, or schedule a virtual consultation.

The Law Office of Patricia E. Tichenor, P.L.L.C.
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(703) 669-6700

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